Tax data manipulation possible, figures altered to test system

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LAHORE/ISLAMABAD: The taxpayers’ data of Pakistanis including non-residents is unsafe and can be manipulated by any E-Intermediary (EI) without the consent of the actual taxpayer which may exploit the verification process of the Election Commission of Pakistan (ECP) by filing income tax returns/wealth statements without the taxpayers consent. Any election contestant can damage his opponent’s candidature through filing his wrong income tax returns/wealth statements through EI in order to manipulate the ECP verification process. Any forgery of taxpayers’ data may make the whole verification process of the ECP vulnerable.

Sources told The News that the serious matter of data leakage has been taken up by the Federal Tax Ombudsman Dr. Muhammad Shoiab Suddle and on a complaint filed by a Lahore based tax lawyer, Complaint No.507/ISB/2013, has been registered for properly investigation of the secrecy of Pakistanis/ non resident Pakistanis taxpayers data.

In the compliant filed by Waheed Shahzad Butt to the FTO office presented the proof that how an EI can play with the secret data of taxpayers. In order to highlight the easy access to the taxpayers’ data, Waheed Shahzad Butt filed the Withholding Tax statements of a government department successfully and filed these documents to the FTO office in his complaint as proof. He filed the WHT statements of ECP, Federal Public Service Commission, Cabinet Division, and FTO office. The E-acknowledgement receipts of the government departments were also submitted with the complaint.

Waheed Shahzad Butt talking to The News said that the taxpayer’s data of everyone is unsafe as it can be accessed by any EI anywhere from Pakistan. He said that by accessing this data the EI can change, file and view any taxpayers income tax/ wealth tax statements without his permission which is a serious crime. He said that any EI can change any election contestant’s data with the intention to damage his candidature. If the EI will do so that it will become a serious problem for the ECP in verification of the election contestants’ tax paying details, he added.

The documents show that nil statements were filed of ECP LTU Lahore, FTO Secretariat and Federal Public Service Commission. The acknowledgement slips of the FTO Secretariat with Electronic Document No (EDN) 31347643, for tax month June 2011, the Federal Public Service Commission with EDN 31347654 having NTN/FTN 9010202-9, ECP, EDN 31347675 for tax period July 2012, ECP for tax period December 2012 EDN 31347664.

In another document, the FTO Secretariat for tax year 2010 with EDN 31531105 had filed by more than Rs100 billion income and Rs25 billion tax was paid by the FTO Secretariat to national exchequer while refundable tax from FBR is Rs99 by the FTO.

Another document shows that Waheed Shahzad Butt is an employee of the FTO Secretariat. The FTO had paid him Rs25 million salary for the tax year 2011 and deducted Rs5 million tax from his salary and submitted to the FBR. Interestingly, Waheed Shahzad Butt designation in E- Acknowledgement slip is FBR Zindabaad how much forgery is possible in the taxpayers data. Chief Executive of Pakistan Revenue Authority Limited (PRAL) Imtiaz Ahmed

said that the EI can access the data of its clients only. He insisted that there was no such provision exists in the system in which any EI can access the data of other than his client. He said the EI can access only limited to their clients as they filed the returns of them other than them access to other registered taxpayers information not possible. He said that if EI can access the data of other than his client then it falls in the crime. When pointed out that a compliant was registered with the FTO secretariat about access of taxpayers’ data and possible forgery in the data, he said when the FTO office will call the PRAL it will answer to it.

On a question of procedure of accessing the data, Imtiaz said that he can not told the nitty-gritty of the procedure on phone call and off end

Waheed Shahzad Butt said that the issue related to tax matters of individuals/persons/citizen has been defined as classified and confidential information under the provision of Income Tax Ordinance, 2001. “The FBR authorities are custodian of the confidential/ classified/privileged information but the practical example exposes completely different than the official responsibilities because most confidential and classified data pertaining to tax returns of every NTN holder of Pakistan is unsafe and any person having email ID of EI and any mobile phone SIM even not registered with the name of user may have free access to the most sensitive information related to taxpayer of Pakistan including non-resident taxpayers/persons”, he added.

Waheed Shahzad Butt commented that leakage in shape of picking tax record of persons/citizens/taxpayers and/or easy access of computer-based electronic information is a severe criminal offence and persons/officials responsible for the security and safety of most confidential data of the taxpayers may be liable to prosecution because they are the lawful custodians of the secret data.

It is worth mentioning that Parliamentarians and Senators had already questioned the leakage of the taxpayers’ data earlier as some politicians tax details were came on media. The FBR is also in trouble water on the data leakage issue and already announced the forensic investigations on theft of the tax return data of the Parliamentarians.

Umar Cheema adds:

If FBR data is any guide, Federal Tax Ombudsman (FTO) Secretariat is the highest tax-paying institution that deposited Rs25 billion tax at the income of one trillion rupees in 2010. This is absolutely incorrect but a tax consultant, Waheed Shehzad Butt, made this alteration demonstrating to the FTO that how vulnerable is data of Pakistan Revenue Automation Limited (PRAL), a subsidiary of FBR assigned the automation of tax data.

Not only he tempered the tax figures of FTO Secretariat, he impersonated himself as employee of FTO drawing annual salary of Rs25 million and showing the deduction of five million rupees as income tax. The PRAL data without questioning the proof of tax payment issued acknowledgement slip that is officially admissible without being questioned. And if sent to PRAL for verification, they will endorse it as shown in their record.

The PRAL system didn’t smell forgery even by the ridiculous information mentioned in FTO Secretariat’s tax return. For instance, Secretariat’s source of income has been shown: “Growing of cereals (except rice), leguminous crops and oil seeds.” The email for contact shown in its tax return is: ‘unsafe_top@pral.pakistan.fbr’. Designation of intermediary who filed tax returns on the behalf of FTO Secretariat has been shown: “FBR Zindabad.” Even such information is not verified.

Given the easy access to PRAL record of all the tax consultants, anybody can alter the information. In case of politicians, they can fabricate an excuse (if caught) that somebody had changed the figures in order to malign them and conspire against their candidature.

This raises serious question marks about the exercise being carried out by Election Commission of Pakistan (ECP) with the help of FBR to cleanse the political stable of tax-evaders as reported by the Center for Investigative Reporting in Pakistan (CIRP) last year found that 70 percent of Parliamentarians didn’t file tax returns and 90 members didn’t have NTN.

The FBR’s Central Verification Cell that is scrutinizing tax-related information of the electing candidates acknowledged there is no system in place to check the veracity of claims in the tax returns. As pointed out by The News, an official dealing with the Cell said they would issue directives to all the regional offices to verify if the tax amount mentioned has been deposited to the public exchequer or not.

A complaint filed by Waheed Butt to FTO Dr. Shoaib Suddle has brought under spotlight the insecurity and inaccuracy of the PRAL data.

Any person having email ID of E-Intermediary (EI) and any mobile phone SIM even not registered with the name of user may have free access to the most sensitive information related to taxpayers of Pakistan including non-resident taxpayers.

There is a legal requirement for every E-Intermediary (like tax consultant who file returns on behalf of client) to obtain written authorization from his client to file tax declarations on his behalf. However, due to inefficiency and professional negligence at the part of FBR anybody may pick dozens activation codes even on a single mobile SIM/email ID and even without intimation/consent of concerned taxpayer.

The EI may access important and the most sensitive and statutory obligations can be maneuvered freely without any restriction from FBR and pathetically even without the knowledge and consent of the concerned taxpayers.

These documents which could be accessed by the EI are ‘Access to already filed income tax returns, access to already filed wealth statement, access to already filed sales tax returns, access to other confidential information recorded in profile, filing of monthly statements of With Holding Tax (WHT) without the consent of taxpayer, filing of annual statements of WHT without the consent of taxpayer, filing of income tax return without the consent of taxpayer, filing of sales tax return without the consent of taxpayer, revision requests for monthly/annual statements/returns, reporting of any person as employee of a taxpayer and refunds applications/management.

As The News contacted FBR’s Cell dealing with the verification of tax information of contesting election candidates, they acknowledged there is no system in place, however, vowed to issue directives to all the tax offices to verify the tax payment information mentioned in the tax returns.

An FBR official talking to The News however downplayed the threat saying no serious contender would like to land in trouble by furnishing wrong information knowing well that he/she stands disqualified even tax declaration turned out to be false at any point after the elections. “Scrutiny is an ongoing process. I don’t think anybody will do such an over-simplistic mistake,” said the official but didn’t rule out the possibility.

According to the Universal Self-Assessment Scheme, whatever declaration is made through the electronic filing will have to be submitted by the system without ascertaining the veracity of information, the FBR official said. However, he admitted there is no active pursuit to verify the claims later on unless a case is selected for audit.


Courtesy: The News

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