Senate Panel Accuses FBR of Protecting Tax Evaders, Warns of Money-Laundering Action

A Senate sub-committee has sharply criticised the Federal Board of Revenue (FBR) over its handling of tax exemptions granted to the former Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA), accusing the tax authority of failing to recover substantial public funds and warning that fines and money-laundering proceedings could follow. The panel, chaired by Senator Saifullah Abro, reviewed delays in recovering an estimated Rs800 billion in outstanding tax dues and ongoing scrutiny of imported goods released under the exemption scheme.

According to details shared with the committee, imported goods worth approximately Rs1,120 billion were brought in under the FATA/PATA tax exemption framework. Records and consumption certificates covering goods valued at around Rs389 billion have so far been identified, while questions remain over the remaining imports and the potential tax liabilities attached to them. Officials told the panel that 223 consumption certificates had been issued to 108 companies, but members questioned why full details of imports, utilisation of goods, production and tax payments were not readily available.

The committee also sought documentary evidence concerning roughly Rs85 billion and asked whether legal requirements were met before goods were released against consumption certificates. Under procedures tied to a 2021 SRO, companies were required to deposit an amount or pay order equivalent to the value of imported goods with customs before release to factories, and to submit utility bills, bank statements, business records and employee details to obtain consumption certificates.

Senator Abro directed the FBR to provide consumption certificates and complete records for 20 major companies previously identified, along with correspondence involving companies under scrutiny, explanations for cases where no objections were raised, and details of document verification within two days. The FBR representative said the law allows for document verification and that companies suspected of fraud can be selected for audit, with findings and recoverable liabilities pursued accordingly.

The committee was told that notices had been issued to 512 companies, with some submitting complete records and others providing partial documentation. Letters to 58 companies were returned or refused, 35 writ petitions were filed before the Peshawar High Court, and 174 beneficiary companies approached the court seeking relief against the inquiry. Abro raised concern that missing records and litigation could obstruct the investigation and urged the FBR to defend its position in court with complete evidence.

The panel also discussed potential tax liabilities and penalties estimated at between Rs400 billion and Rs500 billion, though officials noted that the actual recoverable amount remains subject to formal verification of records and legal scrutiny. The hearing underscores growing parliamentary pressure on the FBR to tighten oversight of exemption schemes and demonstrate that public revenue is being protected.