ISLAMABAD: The Federal Board of Revenue failed to implement order of the Federal Tax Ombudsman (FTO) regarding devising a secure automated system and conducting third party probe into vulnerabilities of the FBR e-system. The order was issued to ensure protection of confidential and classified data of the taxpayers.
As per details, the former FTO issued the orders on a public interest complaint filed by a Lahore-based tax lawyer Waheed Shahzad Butt. In it observation, the FTO directed the FBR to conduct a thorough investigation through a credible third party in relation to the vulnerabilities of the FBR’s e-system.
The FTO stated that in the complaint had produced proof that how an E-Intermediary (EI) can play with the secret data of taxpayers. It is to be noted that Waheed Shahzad Butt to highlight easy access to taxpayers’ data, filed the Withholding Tax statements of a government department successfully and attached these documents to his complaint to the FTO office.
The complainant alleged maladministration on the part of the FBR involving negligence and incompetence in ensuring safety of taxpayers’ confidential and classified data. He maintained that any EI can show a taxpayer as his client in the FBR’s e-system even without knowing his e-mail ID or mobile number, thereby breaking into the confidential data possession by the FBR. Both the complainant and the relevant FBR officials including CEO Pral were called for a hearing. The CEO Pral, Manager Pral along with a representative of the FBR attended the proceedings.
The complainant then demonstrated how the withholding tax statement of a government department could be successfully filed. He filed the withholding statements of ECP, FPSC, Cabinet Division and FTO Secretariat. With permission, he successfully manipulated the FBR’s e-system to show himself as an employee of FTO Secretariat who was paid a salary of Rs25 million, with income tax deducted on his salary at Rs5 million. If that was not enough indictment of the FBR’s e-system, he filed a return of income of FTO Office for tax year 2010 with the Electronic Document Number (EDN) 31531105 showing an income of Rs100 billion, with Rs25 billion as tax paid by the FTO Secretariat and Rs 99 (only) as refund due.
The complainant remarked that if FBR data was any guide for the purposes of verification of income declared in the tax returns and tax paid, the FTO Secretariat was the ‘highest tax-paying institution’ that had deposited Rs25 billion income tax in tax year 2010.
The departmental representatives (DRs) could not offer any plausible, justifiable defence against the evidence provided by the Complainant. They could not belie the withholding statements and tax returns of FTO Secretariat, among others. FBR appears to have badly failed to devise a secure automated online system to safeguard confidential and classified data of taxpayers.
It is to be noted that the FBR has decided to place new safeguards in the database of taxpayers to ensure security of sensitive, confidential and classified data by enhancing existing security features in the electronic systems maintained by the FBR.