FBR’s Tax Terror: CFOs Live in Fear of Harassment

For days, we’ve seen FBR chairman and Finance Minister publicly stating that companies are evading sales tax, and they have data on tax evaders. However, instead of taking action against these companies, they’re now shifting the responsibility to CFOs.

The proposed mechanism is to make CFOs file sales tax returns with an affidavit, ensuring that:

1. Purchases were made from genuine suppliers.
2. Sales were made to genuine customers.
3. Input tax claims were legally used for taxable supplies.

Verifying genuineness of buyers / suppliers in the supply chain is humanly impossible. Moreover, affidavit on claim of input tax creates interpretational issues, as taxpayers and tax departments may disagree on what constitutes taxable supply.

Holding CFOs responsible and penalizing them is harsh. Ultimately, it seems FBR is passing the buck. FBR officers register taxpayers, verify information, and authorize invoicing. If a party is found to be dummy, shouldn’t the tax officer be held responsible?

In Pakistan, there are around 10,000 qualified CAs, with over 7,500 having left. Only 2,500 remain. Imposing restrictions will discourage professionals.

How can an employee verify suppliers’ and customers’ authenticity? It’s practically impossible.

This step needs reconsideration, as it’s constitutionally and legally harsh. FBR and Finance Minister should withdraw this proposal ASAP to prevent difficulties for businesses and salaried individuals, especially considering FBR officers’ harassment. The FBR should first assess its own officers. Bribery, illegal or non-existent NTN / STRN registrations are happening at the FBR level. To control this, FBR hasn’t issued instructions or obtained affidavits from tax officers promising not to accept bribes or work honestly. If such steps are necessary, they should be taken first at the officer level.