Professional Documents
Culture Documents
on
Federal Tax Ombudsman
PROJECT COORDINATORS
1. Dr. M. Inayat Khan
2. Dr. S.M. Zia
3. Dr. Abdus Saboor
4. Dr. M. Faisal Qadeer
5. Dr. Abdul Majid Makki
6. Dr. Muhammad Aslam
7. Dr. Islam Khan
IT EXPERT
Dr. Khalil Ahmed
PROJECT INVESTIGATORS:
1. Mirza Samiullah Baig 14. Mr. Kashif Saeed
2. Mr. Jahanzaib 15. Mr. M. Sajid
3. Mr. M. Usman Asghar 16. Mr. M. Mehtab Akbar
4. Mr. Tahir 17. Mr. Mumtaz M. Khan
5. Mr. Zakria 18. Mr. Rashid Ali Jan
6. Mr. Abdul Hafeez 19. Mr. Shah Rukh
7. Mr. Abdul Razaq 20. Mr. Shehzad
8. Mr. Abid Hussain 21. Mr. Usama
9. Mr. Abuzar 22. Mr. Zahid Ali
10. Mr. Ghulam Mustafa 23. Mr. Zahid Bashir
11. Mr. Iftikhar 24. Ms. Hina Gul
12. Mr. Irswhad Ullah 25. Ms. Tooba Batool
13. Mr. Jumo Khan 26. Rana Gulraiz
Foreword
While attending a seminar on “Measures to enhance transparency in tax collection and
role of FTO” held on 5th August 2010, along with the Honourable Federal Tax
Ombudsman, the matter of effectiveness of the FTO establishment came into
discussion. During this discussion, the Honourable Federal Tax Ombudsman proposed
that Transparency International-Pakistan being a reputable and an independent
organization may get a study done which can determine the effectiveness of the FTO
Office. Accordingly, Transparency International-Pakistan (TIP) accepted the proposal
and decided to conduct the first of its kind “Citizen Report Card (CRC) Study” in
Pakistan.
TIP and FTO jointly shaped up the design for the study while the questionnaire was
prepared by TIP . Subsequently an independent research firm, Islamic Countries
Society of Statistical Sciences (ISOSS) was appointed to carry out the study. It took a
lot of efforts as coordination with the FTO Office in Islamabad, FBR offices and trade
bodies spread across the country was by no mean an easy task. The whole exercise
was completed in a period of around two months and utmost care was taken during
each and every step.
From the study, it can be seen as to how it can be helpful in understanding the
shortfalls and improving the service quality. Actually, ‘Citizen Report Card (CRC)
Study” when done through an independent medium plays the role of a bridge between
the service provider and the stakeholders. The Honourable Federal Tax Ombudsman
deserves appreciation for taking a quantum leap in this regard for self accountability
through independent party. The result of the study could have affected the over-all
reputation of the organization but I’m pleased to say that 79% of the respondents
regarded the organization as ‘Helpful’ while the remaining 21% think of it as ‘Highly
helpful’. It’s a big achievement for an independent public sector body to have such a
positive response from its stakeholders. I hope that other findings will help the
organization in further improving the services.
The report findings are that FTO operations shows that most of the taxpayers who
lodge complaints against a specific tax department are significantly satisfied with the
working and response of FTO. In summary, 87% of respondents felt satisfied with
FTO performance. It is successfully addressing taxpayers’ grievances and is more
effective in solving tax related problems of small taxpayers. FTO resolves most of the
cases in much less time though a few cases remain pending. Being a quasi-judicial
forum, time becomes an important factor in the functioning of Federal Tax
Ombudsmen, as per respondents of the survey, FTO resolves most of the cases within
30 to 35 weeks. At operational level, another vital segment is the performance of
individual office in various provinces of Pakistan, as per collected figures and
analysis, FTO Lahore office acquires minimum time in deciding taxpayer’s cases
while FTO Karachi and Islamabad take longer duration in dealing with such cases.
Similarly, FTO Quetta is having the minimal registered complaints; the one reason
perhaps is the late establishment of Quetta office and secondly public awareness about
FTO functions. The time factor can be improved by infusing systematic approach at
the time of complaint related data collection which carved the future processing of the
respective case
I would also like to invite other public sector organizations to follow the example of
FTO and get such studies done for assessment of their performance and improvement
in their work and feed back for further improvements, through third parties.
TI is thankful to M/s ISOSS for conducting the report card study, and also Chairman
FBR, Mr Salman Siddique who took personal interest is enabling TIP to have the
responses from FBR.
Chairman
Transparency International Pakistan
Executive Summary
The main objective of this study is to determine whether FTO fulfills the
extent of obligations defined by the 2000 FTO Ordinance; what are FTO weak points,
gaps and inefficiency based on the perception, experience and knowledge of persons
who lodge complaints with FTO against taxation officials. To achieve these
objectives, Transparency International Pakistan has prepared questionnaires which
focus on structural and operational details related to stakeholders. For analytical
purposes, Citizen Report Card (CRC) methodology has been deployed, which itself is
a proven technique for public opinion analyses in relation to public sector services
and policies. The CRC survey focuses on the FTO performance for the year 2009 and
2010. The sample size is 300 in which Islamabad, Lahore, Karachi and Quetta has
configured sample sizes of 50, 125, 75 and 50 respectively.
Result of this study provides headway towards process re-engineering and re-
structuring, as the responses from taxpayers. FTO offices are dealing with a large
number of complaints at individual level.
Analysis related to FTO operations shows that most of the taxpayers who
lodge complaints against a specific tax department are significantly satisfied with the
working and response of FTO. In summary, 87% of respondents felt satisfied with
FTO performance. It is successfully addressing taxpayers’ grievances and is more
effective in solving tax related problems of small taxpayers. FTO resolves most of the
cases in much less time though a few cases remain pending. Being a quasi-judicial
forum, time becomes an important factor in the functioning of Federal Tax
Ombudsmen, as per respondents of the survey, FTO resolves most of the cases within
30 to 35 weeks. At operational level, another vital segment is the performance of
individual office in various provinces of Pakistan, as per collected figures and
analysis, FTO Lahore office acquires minimum time in deciding taxpayer’s cases
while FTO Karachi and Islamabad take longer duration in dealing with such cases.
Similarly, FTO Quetta is having the minimal registered complaints; the one reason
perhaps is the late establishment of Quetta office and secondly public awareness about
FTO functions. The time factor can be improved by infusing systematic approach at
the time of complaint related data collection which carved the future processing of the
respective case.
Analytically, data is providing various dimensions and highlighting various
aspects of problems. It is not only exposing the most active business sector or
exceptionally highlighted type of complaint due to continuous repetition which also
depicts the ineffectiveness of FTO decisions at tax department level but it also shows
the necessity of initiatives for BPR (Business Process Re-Engineering) at FTO offices
to improve the response time, effectiveness of decisions and to control the
maladministration. It is important to note that highest ratio of complaints are
generated by small sized businesses which are playing vital role in the economy of the
country. More precisely 56.7% complaints are related to the time management in FTO
case resolution or decision while 24.3% complaints are again related to time
management inversely as it is related to the inefficiency of FTO offices. As mentioned
earlier that highest ratio of complaints are submitted by small businesses. It is also
cross confirmed by a significant figurative of 48.3% complaints which are lodged by
taxpayers who are not members of any trade body or chamber of commerce and
industries, which depicts the need to enhance the service horizon beyond membership
at business platforms like chambers or trade bodies. Federal Tax Ombudsmen offices
resolved 76% of cases submitted during year 2009 and 2010 which shows that by
infusing the changes and improvements, FTO may become an active segment of
public sector which will not only enhance the confidence of taxpayers but also
reduces the maladministration in various tax departments.
CRC study of the FBR Offices reveals that 71 % complaints pertains to similar
act of maladministration and FTO decides 77 % of the complaints of
maladministration against the tax departments. But there is not a single case where a
serious action is taken against the staff by awarding major penalties. All the FBR
officials believe that FTO is useful in rooting out the maladministration in the
Government offices.
Due to extremely low response rate, CRC study from the Trade Bodies and
Tax Bar Associations, the results are not conclusive. However Chambers and Tax Bar
Associations give top priority to FTO for handling complaints.
The study strengthens the relationship between FTO and the taxpayers who
consider that FTO is a blessing for them.
Contents
Foreword
Executive Summary
1. Introduction
1.1 Federal Tax Ombud
1.2 Federal Board of Re
2. Objectives and Scope of the
Report
2.1 Main Aim of the Stu
3. Project Methodology: (Citizen
Report Card Methodology)
3.1 Designing of Questi
3.2 Data Collection usin
Sampling Technique
3.3 Sample Selection Pr
3.4 Project Execution an
Implementation Me
4. General Taxpayers Information
4.1 Introduction
4.2 Taxpayers Complain
Provinces and FTO S
4.3 Taxpayers Matrix
5. Citizen Report Card Analysis
5.1 Taxpayers Profiling
5.2 Sample Taxpayers C
Province/FTO Statio
5.3 Taxpayers Business
5.4 Taxpayers Business
5.5 Taxpayers Business
5.6 Taxpayers Business
5.7 Taxpayers Tax/Duty
5.8 Taxpayers
Memberships/Assoc
5.9 Taxpayers Perceptio
Services
5.10 FTO Response Time
5.11 FTO Solution Time
5.12 FTO Response- Qua
5.13 Taxpayers Problems
5.14 Taxpayers Referral
Stations
5.15 Taxpayers Complain
Help – Trade Bodies
5.16 Taxpayers Complain
Summary
5.17 FTO Performance R
Taxpayers
5.18 FTO Findings about
Complaints
5.19 Post Findings Scena
5.20 Taxpayers FTO Qua
Province/FTO Statio
Category /Form of B
6. Citizen Report Card Analysis
of FBR Offices
7. Citizen Report Card Analysis
of the Chambers, Trade Bodies
and Tax Associations
8. Survey Key Findings
9. Appendices
Appendix-A
Appendix-B
Appendix-C
1. Introduction
1. Introduction:
The main problem of the industry and business that concerns the taxation
departments is the assumption of FBR that income tax is low, although revenue
collection amounts to 38% of the total receipts. It is interesting phenomena that
growth in industrial sector has decreased whereas the tax collection has increased
except for the years 2008-09 to 2009-10 when industrial sector growth is 4.4% as
income tax collection is up to 16.4% and 13.8% for both direct and indirect tax
collection. Analysis shows that the common complaints of taxpayers are related to
refund and rebate. Income taxpayer’s refund/rebate has increased by 9.9% whereas in
indirect tax, FBR has not provided refunds/rebates. It has decreased by 18.0% in
2009-10 as compared to 2008-09 (FBR, 2010).Once Chief Justice of Pakistan, in one
of the cases on May 05, 2009 has remarked that “The people of Pakistan have lost
faith in the Income Tax Department. The loss of faith pointed out by the Chief Justice
is not limited to the Tax Department only” (FBR 2010-11). Tax department has to
work for the people and not against the people of Pakistan. They are all paid by the
revenue collected via taxes.
1.1.1. Organization
Advisor
Secretary
Consultants/Experts
Advisor
FTO
Advisors
(Regional Office)
Karachi
Advisors
(Regional Office)
Quetta
Advisors
(Regional Office)
Lahore
Advisors
(Regional Office)
Peshawar
1.1.2. Functions:
FTO resolves complaints and provides relief to the public by carrying out
independent investigation about tax maladministration and conducts transparent
independent complaints healing service.
FTO aims to redress taxpayer’s grievances fairly and quickly after examining
all facts. If Revenue Division has acted wrongly, FTO recommends the Revenue
Division to put things right for the complainants.
FTO has direct link with the Civil Society by creating Advisory Committee
and Transparency International (TI) and has frequent meetings with Tax Bar
Associations, Chambers of Commerce and Industries and Trade Bodies. FTO is open
to receipt of feedbacks from the stakeholders and Civil Society on line. Citizen can
approach FTO by
E-filings their complaints at no cost.
1.2.1. Organization:
1.2.2. Functions:
The main aim of this study is to determine whether FTO fulfills the extent of
obligations defined by the 2000 FTO Ordinance; what are FTO weak points, gaps and
inefficiency based on the perception, experience and knowledge of persons who lodge
complaints with FTO against taxation officials? This study therefore seeks to gather,
review and where possible, analyze existing data relevant to the various taxpayers’
sectors in the four provinces of the country, in order to assess its values and
implications for management. Data gaps will be identified and issues requiring
research attention will be recommended. Improvement needs relevance to the
accessibility, processing and analyzing of information required for resolution of
taxpayer’s complaints.
3. Project Methodology
(Citizen Report Card Methodology)
3. Project Methodology:
(Citizen Report Card Methodology)
Citizen Report Card (CRC) technique is a proven survey technique. A survey
solicits and aggregates user perception on quality of public services. Exact public
accountability provides indicators to agencies and pressure for change. CRC targets
feedback from the actual users of services regarding availability of service, access to
the service, reliability of the service, quality of the service, satisfaction with service,
responsiveness of service provider, hidden costs – corruption and support system and
quality of system. CRC initiative involves following steps:
• Identifying Scope and Purpose
• Designing Questionnaires
• Survey Sampling Technique
• Project Execution and Implementation Methodology.
• Data Analysis
• Dissemination of Findings
The basic statistics used are all well-known whereas specific aspect of gap
analysis is employed in eliciting important underlying and hidden information.
It is a simple but effective tool for determining gap between the current status
of an event and the benchmark. One can detect gap over time, over space and over
values. Gap analysis helps in difference reduction as well as in reaching the close
proximity of accuracy. In this study, the gap analysis is used to determine the
difference between various phenomena and to find the actual performance with its
expected performance. It is also used to rank the performance. In general the
formulation is as follows:
In Baluchistan, complaints are from two cities only viz. Chaman and Quetta.
In Khyber PakhtunKhwa, complaints are received from 13 cities. There are 52
complaints from the Province. Abbottabad and Peshawar cities have 22 complaints;
the remaining complaints are from 11 cities (see Table B-1, Appendix-B).
In Punjab, 1398 complaints are from 58 cities. The major complaints are from
Lahore, which comes to 530 in two years. The second largest city is Faisalabad where
182 complaints are lodged. The third city is Islamabad and fourth city is Jhang where
101 complaints are lodged. The rank of the cities is presented in Table 4.1.
Nine cities account for 81% of the complaints and other cities account for 19%
of the complaints. In Sindh, 562 complaints are lodged. Of 562 complaints, 522 are
from Karachi and 25 from Hyderabad. The two cities account for 94% of the
complaints. Of total 2027 complaints, four cities of Punjab and two cities of Sindh
account after 73% of the total complaints in the country. Major complaints come from
Lahore, Karachi, Faisalabad, Islamabad and Jhang. Study of these six cities could
provide relevant information about FTO or the FBR and its Tax departments.
The relative size of the complaints originated from the eight cities is shown in
the following diagram (Fig. 4.1).
In Baluchistan, there are only 15 complaints registered, two from Chaman and
13 from Quetta. Of these 15 complaints, 7 complaints are in 2009 and 8 in 2010.
Seven complaints in 2009 form Baluchistan are registered at Karachi station and in
2010 the 6 complaints are lodged at Quetta station and 1 at Lahore station in 2010.
In Sindh, there are 263 complaints in 2009 and 299 in 2010 that brings the
total to 562. Of these 263 complaints in 2009, 255 are registered with Karachi station
and 8 with Islamabad. Of 299 complaints in 2010, 290 complaints are registered with
Karachi Station, 4 with Lahore, 4 with Islamabad and one complaint is registered with
Quetta station.
In Punjab, total numbers of complaints are 1398. Of 1938 complaints 518 are
registered in 2009 and 880 in 2010. Of 518 complaints in 2009, 10 are registered with
Karachi station, 329 with Lahore, and 179 with Islamabad station. Of 880 complaints
in 2010, 34 complaints are registered with Karachi station, 735 with Lahore, 111 with
Islamabad and none with Quetta station (See Table 4.1).
Considering the taxpayers data of two years, the taxpayers matrix has been
given in
Table 4.1.
The cross tabulation of complaints from the provinces registered with FTO
stations is at Table 4.1. There are 15 complaints from Baluchistan. Of 15 complaints
from Baluchistan, 08 are registered with FTO Karachi, 01 with FTO Lahore and 06
with FTO Quetta. Similarly, of 562 complaints from Sindh, 545 complaints are
registered with FTO Karachi, 04 with FTO Lahore, 12 with FTO Islamabad and one
complaint is registered with FTO Quetta. Similar situations occur with Kyber Pakhton
Khwa and Punjab.
Fig. 4.2: Taxpayers’ Complaints before FTO by FTO Stations and Year
In 2009, FTO received 818 complaints from taxpayers and in 2010 the total
complaints received were 1217. Of these complaints, 95.9% pertain to Income Tax. In
addition to payment of Income Tax, some pay all types of taxes viz. 5.49% pay sales
tax, 28.9% custom duty and 15% federal excise duty.
4.3 Taxpayers Matrix
There has been a 50 percent increase in the taxpayer’s complaints from 2009
to 2010. The major increases are at Lahore and Karachi stations. In Islamabad station,
the size of complaints has decreased from 210 complaints to 145. In Lahore and
Karachi combined, the complaints have increased from 601 cases to 1065 cases. It
may be due to awareness of the FTO regional offices. The heavy burden is on Lahore
and Karachi offices (Table B-2).
In order to provide the basic information on the authenticity and validation and
execution of survey, it is essential for the project team to know the total sample units
viz. taxpayers and their responses.
The sample size proposed by TIP was 300 distributed according to FTO
stations (Islamabad – 50, Lahore – 125, Karachi – 75 and Quetta – 50). A total of 300
random numbers is generated from various cities of Pakistan. It is a common practice
to select a sample portion of random numbers to be used as reserve sampling units. In
addition to 300 random numbers, we selected 67 random numbers which are used as
reserve. A total of 367 taxpayers are contacted and interviewed (See Table B-3, B-4,
B-5 and B-6 of Appendix-B).
The graphical presentation of the total complaints and selected sample for the
year 2009, 2010 and combined is available in Fig. 5.1 (a, b and c).
Fig. 5.1(a): Total Complaints and Sample including Reserve (2009)
Fig. 5.1(c): Total Complaints and Sample including Reserve (2009 & 2010)
At this stage, 50 cases could not be found from FTO Quetta office as there are
only 7 complaints registered with the Station. Moreover, the total number of
complaints registered from Balochistan is 15, as such; the sample size of 50 is not
possible. Again of the 15 cases, 08 are registered with Karachi Station, 01 with
Lahore and 06 with Quetta Station.
Of the 367 taxpayers who are contacted, 248 give responses. For further
details see Table B-8 and Table B-9 of Appendix-B. Other 119 cases either refused to
answer or were untraceable. Table B-5 (Appendix-B) shows the details. The responses
rate is 82.7% with respect to the proposed sample which is reasonable responses on
international standards (Table 5.1).
The comparison of total complaints filed before FTO during 2009 and 2010
with the actual sample (responses received) is graphically shown in the Fig. 5.2.
The sample complaints lodged with the four FTO Stations are given in Table
5.2 and Fig. 5.3.
The sample complaints received by provinces are given in Table 5.3 and Fig.
5.4. During the year 2009 and 2010 there are 6 sample complaints from Baluchistan, 9
from Khyber PakhtunKhwa, 166 from Punjab and 67 from Sindh (see Table B-8 of
Appendix-B).
There are three categories of taxpayers in the study; large, medium or small in
size. The frequency function of category of tax payers business is given at Table B-12
of Appendix-B.
The percentages of business category are given in Table 5.4 and Fig. 5.5.
It shows that larger companies are very few as compared to small companies.
5.4 Taxpayers Business Type
The percentages of types of businesses of taxpayers are given in the Table 5.5.
For frequency function see Table B-13 of Appendix-B.
It is important to find that very few companies are new whereas 75.2% of
companies were established more than 5 years ago. The average age of the companies
is about 7 years. Table 5.7 and Fig. 5.9 show the relative age of companies. For
frequency function of the age of the business of the taxpayers see Table B-15 of
Appendix-B.
Almost all companies pay income tax, more than 54.9% companies pay sales
tax and 29% custom duty and 15% pay federal excise duty. However, many
companies pay all type of taxes and duties. The Table 5.8 shows the distribution of
companies who pay taxes/duties. For the frequency function See Table B-16 of
Appendix-B.
The graphic presentation of the type of taxes / duties is as under (Fig. 510):
48.3% of the taxpayers are not members of any association, however about
46.9% are members of the Chambers of Commerce and Industries. And only 4.7% are
members of any Trade Bodies. Most of the small tax payers (about 66 %) are not
members of any association (Table 5.10 and Fig. 5.12) and Table B-18 of Appendix-
B.
Table 5.10: Membership of Chambers/Trade bodies – Taxpayer’s Category
Catego Membership
ry Chamber No Other
of Associati Trade
Commerc on Bodies
e
Large 25.0 2.9 11.2
Mediu 35.4 27.5 44.4
m
Small 39.6 65.7 44.4
N/A 0 3.9 0
Total 100 100 100
The followings are some of the complaints that taxpayers lodged with FTO:
• Refunds
• Inordinate delay in responses
• Wide spread maladministration
• Non-observance of mandatory time limits
• Non-response of taxpayer’s correspondence
• Low priority of dispute resolution
• Inconsistent decisions
• Discriminatory and high handed treatment
• Loss of files and records
• Weak defense of issues by FTO employees
• Tax fraud cases: Inefficient handling of cases
• Misuse of information and informers
The main complaint is inordinate delay in refund and decision making and
inefficiency in dealing with the cases. Inefficiency increases delay. However,
taxpayers seem to be satisfied with FTO except the cases where decisions taken are
delayed.
The incidences of delay are more common for income tax payers who are sole
proprietors and manufactures. For the frequency function of this variable and its cross
tabulation with contingencies like type of business, taxes paid, form of business,
provinces and FTO Station see Table B-20, B-21, B-23, B-24 of Appendix-B.
5.9.2 Taxpayers Redress Grievances
The Table 5.12 shows the percentage of persons who approached the above
offices. For the Frequency function see Table B-25 of Appendix-B.
About 41.6% of taxpayers contact the person who is direct in charge of their
cases and is creating problem for him, and about 38.7% go to FTO offices. Nearly one
fifth of persons lodge complaints with FBR offices or its tax departments but rarely go
to Courts or Trade body.
Taxpayers are asked if they have been asked for undue favor from someone
from FTO offices. It is also asked if the taxpayers used some reference within FTO.
About 83.5% complainants are not asked for undue favor though 16.5% of the
complainants are asked for the favor from FTO offices (Table B-35 of Appendix-B
and Fig. 5.15).
Fig. 5.15: Contact person at FTO asked favour from the Taxpayers
About 90.6% of taxpayers are satisfied with the staff behavior (Table B-37 of
Appendix-B). It shows that undue favor is not asked for as they are satisfied with the
staff behavior. It is further strengthened by the fact that in the 48% complainants’
opinion, the FTO performance rate is excellent and 40% say that their performance
rate is good. It shows that about 88% of taxpayers are satisfied with FTO’s rate of
performance (Table B-38 of Appendix-B). This is also due to the fact that 87.4% of
the taxpayers did not used any references within FTO and 85.8% did not used any
agent or broker at FTO (Table B-32, B-34 of Appendix-B and Fig. 5.16 and Fig. 5.17).
FTO takes three different steps in findings the solution to the complaints; the
first step is the responding to the complaints, second step is the investigation and
solving the problems and third step is final findings or the decisions by FTO.
The mean response time of taxpayer’s complaints comes to 4.8 weeks for
Baluchistan, 8.3 weeks for Khyber PakhtunKhwa, 5.9 for Punjab and 10.6 weeks for
Sindh Province (Table 5.13 and Fig. 5.18).
Taxpayers believe if the first response to the receipts of their complaints are
acknowledged instantly by email the redressing time of complaints will be drastically
reduced.
A study of the FTO stations performance regarding first response time shows
that FTO Quetta station is the most efficient station in responding the taxpayers’
correspondence. But this is due to no workload in Quetta whereas Karachi station
takes much longer time of 10.5 weeks in responding taxpayers’ correspondence.
Lahore and Islamabad stations take about 6 weeks each (Table 5.14 and Fig. 5.19).
On the average, first response is 7.2 weeks, solution of problems take 15.3
weeks whereas final findings/decisions take 9.9 weeks (Table B-48, B-49 and B-50 of
Appendix-B). It comes to a total of 32.5 weeks in giving the decisions. The last part is
the implementation of the decisions. In small and easy cases, implementation is done
almost immediately according to small sized companies whereas implementation is
delayed for years as FBR forward such cases to Government of Pakistan through
Ministry of Finance for final decision on implementation of FTO decisions.
Fig. 5.20: Average Net Time for Final Decision from Provinces
Total time for complaints for Sindh takes 48.1 weeks and for Punjab, it takes
26.5 weeks. In respect of regional offices, the average times for final decision for the
four FTO stations are given in Table 5.16 and Fig. 5.21.
Table 5.16: Total Average Net Time for Final Decisions by FTO Stations
FTO Stations Total Average Time (in Weeks)
Islamabad 28.6
Lahore 26.7
Karachi 47.6
Quetta 13.0
All Station 32.5
Fig. 5.21: Average Net Time for Final Decision by FTO Stations
Quetta stations takes only 13.0 weeks in its final findings. It is because the
station does not have many complaints and moreover it is a newly established one and
only 7 complaints were registered with Quetta Station during the year 2010. Lahore
station takes 26.2 weeks in disposing of a large number of complaints. Karachi station
seems to take a longer time of 47.6 weeks in deciding the cases. Some steps have to
be taken in reducing the total time in all stations.
5.12 FTO Response- Quality
Table 5.17 and Fig. 5.22 show the taxpayer’s satisfaction with FTO working:
Very few taxpayers complains for lack of interest of FTO officials (13.9%)
(Table 5.18 and Fig. 5.23). However FTO Officials interest needs to be improved.
5.13 Taxpayers Problems–FTO Stations
There are some problems faced by a small number taxpayers at FTO regional
stations. About 20% taxpayers faced the following types of problems at FTO offices:
• do not lodge complaint immediately.
• are not present at the time of taxpayer’s visits.
• do not guide properly,
However, most of the taxpayers do not face any problem by them at FTO.
Table 5.19 and Fig. 5.24 show the details of the problems.
Moreover, taxpayers did not hire any agent or broker at FTO offices Tables
5.20, 5.21 and 5.22).
Table 5.22: Contact Person at FTO asked Favor from the Taxpayers
Asked FTO Person Percentage (%)
Yes 16.5
No 83.5
Total 100
Fig. 5.27: Percentage of Contact Person at FTO asked Favor from the Taxpayers
Taxpayers consider FTO officials have high integrity by not asking for any
favour from the taxpayers (83.5%). However, a very number of officials ask for
favour (16.5%).
The taxpayers were asked in case of trouble with Tax Departments or FTO or
Trade Body like chambers of Commerce and Industries or Tax Bar Association or any
institution helped them. Only 17.4% of taxpayers sought help from Trade Bodies
(Table 5.23 and
Fig. 5.28). In 42%, the help was not applicable as 48.3% of companies are not
member of Chambers / Trade Bodies (See Table B-17 of Appendix-B).
About 40.6% of taxpayers expressed their opinion that no one helped them in
the time of distress. Trade bodies did help only 17.4% of taxpayers.
This may be also due to the hiring of lawyers / consultants to represent their cases
before FTO offices as more than 86% taxpayers have hired the serviced of lawyers
and consultants (Table B-33 of Appendix-B).
5.16 Taxpayers Complaint Results – Summary
It is the opinion of taxpayers that FTO solved more than 76% of complaints
within
the average time period, however only 5.0% complaints are pending and proceedings
of 11.3% complaints are under way and may lie with active consideration of the FTO
officials (Table 5.24 and Fig. 5.29).
FTO findings are of two types, the findings are against the taxpayers or it is
against the department. FTO decide 89% of cases in favor of the taxpayers who
appreciate the FTO performance. There are only 5.3% cases where FTO decision is in
favor of FBR or its departments.
Taxpayers have high opinion (93.5%) about the FTO competency in their
responses (Table 5.17) regarding time to resolve their complaints (32.5 weeks) (Table
B-51) their excellent performance rating (87%) (Table 5.25) and deciding cases in
their favour of (89%) (Table 5.26 and Fig. 5.31).
5.19 Post Findings Scenario
Once the taxpayers receive final verdict on their complaints, the results
regarding implementation of findings are summarized in Table 5.27 and Fig. 5.32.
In case of final decision, 89% cases where FTO decides in favour of taxpayers
(Table 5.26), FTO asked the tax departments to implement the findings. In cases tax
departments do not implement the FTO decision or slowdown the implementation
process taxpayers file reviews with FTO. In some cases, where refund amounts are
large, FBR files review against FTO findings in 7.6% of cases and submits such cases
to the President through Ministry of Finance. Taxpayer’s opinion is that FBR must
implement the FTO decision. If decision goes against the department, FTO has no
power to get the decision implemented.
About 24% of cases are pending, proceeding underway and other unsolved
cases with FTO (Table 5.24). Efforts can be made to improve the system to minimize
to improve the system to minimize the pending cases.
For each of the above quality factor, we compare the quality responses of
Provinces. Table B-56 of Appendix-B shows that Baluchistan Province is less
satisfied with FTO responses. The taxpayers from Baluchistan file their cases with
FTO Karachi Station. The number of taxpayers are very small to provide real
opinions. Other Provinces are satisfied with FTO responses. Balochistan is satisfied
with FTO staff behavior (Table B-57 of Appendix-B) and taxpayers from other
provinces are also satisfied with FTO staff behavior. Moreover all provinces rated
FTO high except only 3.6% taxpayers rated FTO poor (Table B-58 of Appendix-B.
The response quality, staff behavior and FTO performance rating of FTO
offices are excellent irrespective of FTO Stations (Table B-59, B-60 and B-61), the
three taxpayers’ categories (Table B-62, B-63 and B-64) and form of business (Table
B-65, B-66 and B-67).
6. Citizen Report Card Analysis of
FBR Offices
6. Citizen Report Card Analysis of FBR Offices
This Section discusses the analysis of the responses of the Government
Officials regarding their department and FTO.
The questionnaire (Part B, Appendix-A) has been designed for this purpose by
the
TI-Pakistan. Table 6.1 shows the list of the Government Offices that responded to the
survey questionnaire.
These departments deal with four types of taxes. In response to the question
about the tax departments being headed by these offices, 17 out of the 20 offices
responded in yes for both Income Tax and Sales tax and 16 of these offices responded
in yes for Federal Excise Duty. The remaining 3 offices responded in Yes to only
Customs. The detail is available in Table B-68 of Appendix-B.
The frequency function of the FBR department is shown in the Table 6.2 and
graphically represented in Fig. 6.1. It may be noted that only 03 offices head the
Custom Department.
The information about the number of complaints filed before the FTO against
maladministration of tax employees for the last three years is shown in the Table 6.3
and is also presented graphically in Fig. 6.2.
Table 6.3: Number of Complaints against Tax Employees
No of Frequency
Complain 2008 2009 2010
ts/Year
1 to 50 7 9 12
51 to 100 3 3 3
More 2 1 3
than 100
None 9 8 3
Total 21 21 21
As per the figures provided by the responding offices, 2463 complaints were
filed before FTO against maladministration of employees in the year 2008. This
number for the year 2009 and 2010 is 522 and 1087 respectively. The total number of
complaints filed before FTO for the three years is 4072. These numbers are
graphically presented in Fig. 6.3. The office-wise detail is available in Table B-69 of
Appendix-B.
Through the percentages provided by each of the office the actual number of
complaints can be estimated. Table 6.6 presents this estimation. It can be observed
from this table that 2898 complaints out of the total 4072 complaints i.e. 71.18
percent pertains to similar act of maladministration. This is also shown graphically in
Fig. 6.6.
Table 6.6: No. of Complaints Pertaining to Similar Acts of Maladministration
he Office Total Complaints Similar Nature
% Fr
LTU Karachi 3
arachi 1
ports 15
Legal LTU - -
arachi 29 10
194 25 4
ad Bin Qasim 3 25
d 39
d 1103 45 4
la 116 87 1
d 49 50 2
247 49 1
I
1876 98 18
124 96 1
145 98 1
100
21 6
di 2
5 50
tal 4072 71.18 28
arachi 29 45 1
194 95 1
ad Bin Qasim 3 75
d 39 10
d 1103 55 6
la 116 10 1
d 49 20 1
247 55 1
I
1876 98 18
124 96 1
145 80 1
100 80 8
21 29
di 2 2
0
5 43
tal 4072 77.13 31
Table 6.9: Response in case the complaint is decided against the Department
No. of Yes
Responses
19 19
19 6
19 7
19 1
Fig. 6.9: Response in case the complaint is decided against the Department
This can be observed from the above table that all offices say that they would
implement the findings. About one third of the offices also ticked the options to file a
review petition before FTO and representation before the President.
Similarly, when these offices are enquired about their response in case FTO
office recommends disciplinary action against the tax functionaries working under
them, almost all the offices claim that they would ‘take disciplinary action in right
earnest’ (Table 6.10). The graphically representation is also shown in Fig. 6.10.
19 1
19 0
The last question of the survey was about the usefulness of FTO in rooting out
the tax maladministration. The responses of the 19 offices responding to this question
are presented in Table 6.13.
The list of the organizations to which the questionnaire has been mailed is
presented in the Table 7.1. There are twelve Chambers of Commerce, seven Tax Bars
Associations and five trade bodies in this list.
Table 7.1: List of the Chambers or Associations targeted for the Survey
Sr Name of Chamber / Association
#
1 FPCCI
2 KCCI
3 LCCI
4 FCCI
5 Quetta Chamber of Commerce and Industry
6 Sarhad Chamber of Commerce and Industry
7 Sukkur Chamber of Commerce and Industry
8 D.I. Khan Chamber of Commerce and Industry
9 Women’s Chamber of Commerce and Industry Karachi
10 Women’s Chamber of Commerce and Industry Lahore
11 Islamabad Chamber of Commerce and Industry
12 Rawalpindi Chamber of Commerce and Industry
13 Karachi Income Tax Bar Association
14 Pakistan Tax Bar Association
15 Karachi Sales Tax Bar Association
16 Lahore Income Tax Bar Association
17 Peshawar Income Tax Bar Association
18 Quetta Income Tax Bar Association
19 Islamabad Income Tax Bar Association
20 Karachi Customs Agents Association
21 Lahore Customs Agents Association
22 S.I.T.E Association of Industry
23 Korangi Association of Trade & Industry
24 Hub Association of Trade & Industry
The Response rate for the email survey from the above organization is very
low. It may be concluded that without formal contact and physical /telephonic
interaction there are less chances to collect reasonable number of responses upon
which a statistical analysis can be performed.
After several reminders only two responses, one from Islamabad Chamber of
Commerce and Industry and one from Quetta Income Tax Bar Association have been
received. Then after some telephonic contacts two more responses, one from Lahore
Income Tax Bar and one from Karachi Custom Agents Associations are received.
Three other associations promise to email the questionnaire, but these are not
forthcoming.
However, on the basis of the four questionnaires received and the telephonic
conversations with the Presidents / General Secretaries of the above associations; and
by virtue of the findings of the main survey from taxpayers’ all over the country,
following points are important:
However, there is a very good perception of FTO among all the trade
associations contacted. FTO being a relatively new forum is expected to become
popular forum in resolving the tax related complaints.
8. Survey Key Findings
8. Survey Key Findings
STRUCTURAL
OPERATIONAL
ANALYTICAL
Appendix A: Questionnaires
Appendix B: Statistical Tables
Appendix C: FTO Offices
Appendix-A
QUESTIONNAIRES
Date:
Nature of Complaints:
Name of the Interviewer:
Name of Respondent:
Large taxpayer
Medium taxpayer
Small taxpayer
Manufacturer
Service Provider
Wholesale Dealer
Retailer
Importer
Exporter
Sole Proprietor
Firm
Association of Persons
Private Limited Company
Public Limited Company
Income tax
Sales tax
Customs Duty
Federal Excise Duty
Officer supervising the tax functionary responsible for causing the grievances
FBR
FTO
Courts
Other (Please specify………………………………………..)
Islamabad
Lahore
Karachi
Quetta
Advisor
Registrar / Director
Deputy Registrar/DD,
Staff
Other (Please specify………………………………………..)
Good
Satisfactory
Non-satisfactory
1 week
1 month or less
3 to 6 months
Other (Please specify………………….)
Yes
No
Q16. Did you use a contact or reference within the FTO Office who helped you in getting the
Yes
No
Q17. Being a member of the trade body, did that agency help you in getting the matter resolved?
Yes
No
Yes
No
Yes
No
Pending
Proceedings underway
Matter solved
Others (Specify……………………………..)
In a week time
1 to 3 Months
Between six months and a year
Others (Please specify…………………)
Satisfactory
Non-satisfactory
Q23. Keeping your past experience in mind, how would you rate the performance of the FTO
Excellent
Good
Average
Poor
Reasons:
Income Tax
Sales Tax
Customs
Federal Excise
Q2. How many complaints are annually filed before the FTO against maladministration of tax
employees working under you? (Please give figures for the last three years beginning 2008)
Q3. What is the percentage of complaints against frequent recurrence of similar acts of
maladministration?
Q6. What is your response in case FTO Office recommends disciplinary action against tax
Q7. In how many complaints, the FTO recommended disciplinary action against your staff during
calendar year 2009?
Q8. What action did you take against the staff reported guilty of tax maladministration by the FTO
Highly useful
Useful
Not useful
Yes
No
Top
Medium
Low
Q3 Does your Chamber/ Association approach the tax department/ FTO on behalf of the
Yes
No
Q4. Does your Chamber/ Association hire/affiliate with professional bodies to take up such matters
Yes
No
Q5. How many tax related complaints your Chamber/ Association had submitted to relevant tax
departments/ FTO on behalf of the companies in the last two years?
2009 ________
2010 ________
Q6. Through your Chamber/ Association, how many tax related complaints were resolved by
relevant departments in the last two years?
2009 ________
2010 ________
Q8. From which industrial sector, does your Chamber/ Association receive most complaints?
_______________
_______________
_______________
_______________
Appendix-B
STATISTICAL TABLES
Table B-1: Population Distribution by Cities
Province City Year
2009 2010 Total
Baluchistan Chaman 0 2 2
Quetta 7 6 13
Khyber PakhtunKhwa Abbottabad 4 7 11
Attock 1 1 2
Bannu 3 1 4
Charsadda 1 0 1
Haripur 4 1 5
Kohat 0 5 5
Landi Kotal 1 0 1
Mansehra 2 2 4
Mardan 0 2 2
Nowshera 1 3 4
Peshawar 4 7 11
Sawabi 0 1 1
Upper Dir 1 0 1
Punjab Bahawalnagar 1 1 2
Bkalwal 1 0 1
Bhakkar 1 1 2
Bahawalpur 0 3 3
Burewala 0 3 3
Chakwal 0 2 2
Chichawatni 2 1 3
Chiniot 3 6 9
Chunian 1 0 1
D.G. Khan 1 2 3
Daska 0 2 2
Depalpur 3 0 3
Faisalabad 69 113 182
Gojra 9 35 44
Gujranawala 11 7 18
Gujrat 12 4 16
Hafizabad 32 35 67
Islamabad 40 83 123
Jaranwala 0 1 1
Jhelum 1 2 3
Jhang 6 95 101
Kamalia 9 4 13
Kamonke 1 0 1
Kasur 13 6 19
Khanewal 0 3 3
Kharian 5 1 6
Khushab 4 0 4
Lahore 203 327 530
Province City Year
2009 2010 Total
Lodhran 1 2 3
Mailsi 2 9 11
Mandi Bahawal Din 0 1 1
Mianwali 1 3 4
Multan 9 7 16
Muridkey 2 5 7
Muzaffargarh 1 2 3
Nankana Sahib 2 5 7
Narowal 5 7 12
Okara 4 3 7
Pakpattan 1 0 1
PindiBhattian 1 1 2
Pirmahal 1 0 1
Pottoki 0 1 1
Rahim Yar Khan 5 0 5
Rajanpur 1 1 2
Rawalpindi 14 25 39
Renala Khurd 1 0 1
Sadiqabad 3 1 4
Sahiwal 9 2 11
Sailkot 5 11 16
Sambrial 0 1 1
Sargodha 8 7 15
Shakargarh 4 0 4
Sheikhupura 6 18 24
Shorkot 0 3 3
Tandianwala 1 0 1
Toba Tek Singh 3 24 27
Vehari 0 3 3
Wah Cantt 0 1 1
Sindh Badin 1 0 1
Dadu 1 4 5
Hyderabad 1 24 25
Karachi 255 267 522
Khirpur 1 0 1
Larkana 0 1 1
Mirpur Khas 2 0 2
Naushero Froz 0 3 3
Sanghar 1 0 1
Tando Adam 1 0 1
Total 810 1217 2027
Table B-2: Taxpayers Matrix by Province and FTO Stations
Grand Total
0 0 7 1 1 0
22 0 22 0 0 30
8 0 263 290 4 4
Table B-26: Filling the Last Complaint before FTO for the Sample
Year Frequency Percentage (%)
90 36.3
158 63.7
Total 248 100
Table B-35: Contact Person at FTO asked Favor from the Taxpayers
Asked Frequency Percentage (%)
40 16.5
202 83.5
Total 242 100
224 100
Table B-42: Response Time of FTO for the Taxpayers
Number of Weeks Frequency Percentage (%)
28 11.4
eks 127 51.8
eeks 26 10.6
Weeks 64 26.1
Total 245 100
Table B-43: FTO Response Time for the Taxpayers - Yearly Comparison
s) 2009 2010
(N = 87) (N = 158)
7.82 6.89
Table B-45: Time Taken by FTO to Solve the Taxpayers' Problem - Yearly
Comparison
s) 2009 2010
(N = 86) (N = 155)
17.52 14.10
6
9
164
66
245
6
9
163
63
241
6
7
158
59
230
Table B-53: Time to Solve the Problem of the Taxpayers for the Four FTO
Station
FTO Station N Mean
(Weeks)
amabad 50 14.1
hore 124 11.6
rachi 66 23.3
etta 1 8.0
All Stations 241 15.3
Table B-54: Time Taken to Give Findings for the Four FTO Station
FTO Station N Mean
(Weeks)
amabad 49 8.7
hore 118 8.5
rachi 62 13.7
etta 1 4.0
All Stations 230 9.9
Table 67: FTO Performance Rating by the Taxpayers for Different Forms of
Business
Form of FTO Performance Rating (Percentage (%)
Business
Excellen Good Average Poor
t
Sole 56.3 35.9 6.3 1.6
Proprieto
r
Firm 70.0 10.0 20.0 0.0
Associati 40.4 51.9 7.7 0.0
on of
Persons
Private 38.5 41.0 15.4 5.1
Ltd
Company
Public 0.0 60.0 40.0 0.0
Limited
Company
Total 49.1 39.7 9.4 1.7
Table B-68: Govt. Offices Heading Tax Departments
Sales Tax
1
0
1
0
0
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
17
Table B-69: Number of Complaints filed before FTO against Tax Employees
008 2009 201
0 0 3
0 0 1
5 6 4
2 20 7
48 54 92
0 1 2
13 18 8
34 86 28
23 43 50
8 5 36
85 79 83
431 164 28
0 0 12
54 34 57
59 10 31
0 0 21
0 0 2
1 2 2
463 522 108
1876 98 183
124 96 119
145 98 142
100
21 6 1
2
5 50 3
otal 4072 71.18 289
Table B-72: Complaints Decided Against the Department
the Office Total Complaints Decided Against the Department
% Fre
U Karachi 3 30 1
achi 1
rts 15 70 11
gal LTU Karachi
rachi 29 45 13
194 95 184
Bin Qasim 3 75 2
39 10 4
1103 55 607
116 10 12
49 20 10
247 55 136
1876 98 183
124 96 119
145 80 116
100 80 80
21 29 6
2 2 0
0
5 43 2
otal 4072 77.13 314
Table B-73: Response in case the complaint is decided against the Department
No. of
Responses
19
19
19
which the 19
Table B-74: Response in case FTO Recommend Disciplinary
Action against a Tax Functionary
No. of Responses
19
tax 19
and 19
against 19
RTO Lahore-I 19
ISLAMABAD
Federal Tax Ombudsman Secretariat
5-A, Constitution Avenue Islamabad
Tel: 051-9211382
Fax: 051-9202235
E-mail: ombudsman@fto.gov.pk
LAHORE
Regional Office, Bungalow No.186-A
Scotch Corner, Upper Mall, Lahore
Tel: 99201825, 99201895
Fax: 99201893
KARACHI
Regional Office, 4th Floor, Shaheen Complex
M.R. Kayani Road, Karachi.
Tele: 021-99213586-90
QUETTA
Regional Office, House No. 141, Shahbaz Town,
Phase-I, Samungli Road, Quetta.
Fax: 081-2863261
PESHAWAR
Regional Office, 46-C/1, Sahibzada Abdul Qayyum Road,
University Town, Peshawar
FTO ORGANOGRAM