The Pakistan Tax Bar Association (PTBA) has raised concerns over the inefficiency and bureaucratic hurdles at the Federal Board of Revenue (FBR), which are hindering business growth in Pakistan.
In a letter dated April 15, 2025, addressed to FBR Chairman Rashid Mahmood Langrial, the PTBA highlighted several operational issues that contradict the government's stated efforts to reform the tax system, particularly in terms of digitization and tax collection.
One of the primary concerns raised by the PTBA is the practice of issuing pre-suspension notices for input tax payments without proper verification. The association argues that this violates Supreme Court guidelines, which stipulate that any suspension of tax registration should only occur after thorough verification and if unpaid dues remain. This practice is seen as detrimental to the business environment, undermining the government's aim to create a tax-friendly ecosystem.
In addition, the PTBA has flagged delays in resolving issues related to sales tax registration suspensions. While the Sales Tax Act allows taxpayers to appeal these suspensions to their Chief Commissioners, the PTBA claims that the appeals are not being addressed in a timely manner, leading to significant disruptions for businesses. To address this, the association has recommended using the IRIS portal to streamline the process, ensure better transparency, and expedite resolution.
The transition to electronic filing for tax appeals has also faced challenges. The PTBA points out that in smaller cities, manual files are still being requested on hearing days, and online hearings are often conducted by unauthorized staff due to the unavailability of senior Commissioners of Inland Revenue (CIR). The PTBA insists that CIRs must personally conduct these hearings to ensure fairness and uphold principles of natural justice.
Another issue highlighted in the letter concerns delays in approving Non-Profit Organizations (NPOs) under Section 100C of the Income Tax Ordinance, which has further compounded difficulties for NPOs seeking tax credits and exemptions. The PTBA claims that the infrequent presence of the Commissioner assigned to approve these applications has caused significant delays, leading to further hardship for NPOs and impeding their operations.
The PTBA's letter reflects growing frustration within the business and tax community. The association has called for the FBR to streamline its internal processes, enhance digital platforms, improve accountability, and remove unnecessary hurdles. These reforms, the PTBA argues, are essential if the government is serious about fostering a business-friendly and investor-attractive environment in Pakistan.
With tax reforms closely tied to Pakistan's broader economic recovery and commitments to the IMF, the pressure on FBR to address these concerns and take corrective action has never been higher. The PTBA hopes that these recommendations will help the FBR deliver on its promises and make tangible improvements in Pakistan’s tax administration system.
