Federal Tax Ombudsman and National Accountability Bureau

Introduction

Federal Tax Ombudsman (FTO) and National Accountability Bureau (NAB) are two crucial organs of the Government of Pakistan. Both of these institutes involve accountability as their core function. The citizens of Pakistan pay their taxes to the government in order to run the governmental affairs and to prevent taxpayers from maladministration of government tax agencies or employees, FTO bears an important responsibility. Whereas NAB is responsible to ensure that the government revenue (taxes) should be utilized by government agencies in the national interest which is beneficial for citizens and also to ensure its protection against corrupt practices. Therefore, both of these government institutions work complementary to each other. As both of these government institutions work complementary to each other, therefore this article aims to explore and compare the roles, history and functions of both institutions. Afterwards, this article will deeply analyze both institutions in terms of authority, mechanism, performance and initiatives.

Discussion

The Government of Pakistan established the Federal Ombudsman in 1983 in accordance with the requirements of the Constitution of the country. Whereas, in accordance with Federal Tax Ombudsman Ordinance 2000, it is expedient to provide for the appointment of the Federal Tax Ombudsman to diagnose, investigate, redress and rectify any injustice done to a person through maladministration by functionaries administering tax laws. Therefore, the Federal Tax Ombudsman shall be appointed in accordance with Section 3 of the said Ordinance to hold office of FTO for a Four years term.[1] The main function of the Federal Tax Ombudsman is to ensure disposal of complaints of tax maladministration promptly, justly and fairly.[2]

The Ehtesab Act, 1997 established an Ehtesab Cell, charged with the investigation and prosecution of corruption. In order to provide for effective measures for the detection, investigation, prosecution and speedy disposal of cases involving corruption, corrupt practices, [misuse or abuse] of power [or authority], misappropriation of property, taking of kickbacks, commissions and for matters connected and ancillary or incidental thereto,[3] the President of Pakistan has  promulgated National Accountability Ordinance, 1999, in accordance to which the NAB was established as the cell's successor, and given the additional responsibility of preventing and raising awareness of corruption so as to hold accountable all those accused of corrupt practices etc. These functions shall be run by Chairman NAB, who shall be appointed by the President in accordance with Section 6 of the said Ordinance for Four years term.[4]

In terms of authority, Chapter IV of the FTO Ordinance, 2000 provides same  powers to Federal Tax Ombudsman as are vested in a civil court under the Code of Civil Procedure, 1908 (Act V of 1908), namely:-

(a)  summoning and enforcing the attendance of any person and examining him on oath;

(b)  compelling the production of documents;

   (c) receiving evidence on affidavits; and

      (d) issuing commission for the examination of witnesses.

Apart from these, FTO has also the power to enter and search any premises and also to punish for contempt.[5]

Whereas, NAB is the apex National Anti Corruption Agency. Its ambit includes cases of Cheating Public at Large. Procedure for launching complaints is a simple application addressed to the Chairman or DG with available evidence attached. All the powers to make the culprit accountable are concentrated with Chairman NAB. However, the procedures have been adopted wherein the discretionary powers of Chairman are exercised through consultative boards i.e. Executive Board Meetings (EBM) at NAB HQ and Regional Board Meetings (RBM) at Regional Level. Therefore, inputs from operational, legal and others are gathered to make the decision logical and reasonable.[6]

The Federal Tax Ombudsman has given vast jurisdiction to investigate into the affairs of all the offices of the Federal Government, except the Supreme Court, the Supreme Judicial Council, the Federal Shariat Court and the High Courts. The Federal Tax Ombudsman may on a complaint by any aggrieved person, or on a reference by the President, the Senate or the National Assembly, as the case may be, or on a motion of the Supreme Court or a High Court made during the course of any proceedings before it or of his own motion, investigate any allegation of maladministration on the part of the Revenue Division or any Tax Employee.[7]

The Chairman NAB and such members, officers or servants of the NAB shall have and exercise, for the purposes of an inquiry  or investigation the power to arrest any person, and all the powers of an officer-in-charge of a Police Station under the Code, and for that purpose may cause the attendance of any person, and when and if the assistance of any agency, police officer or any other official or agency, as the case may be, is sought by the NAB such official or agency shall render such assistance provided that no person shall be arrested without the permission of the Chairman [NAB] or any officer [of NAB] duly authorized by the Chairman NAB.[8]

FTO has recently taken certain productive initiatives like interaction with civil society organizations and enhancing their roles, outreach meetings with Tax Bars and Chamber of Commerce and Industry, establishment of online complaint management system, paperless environment, E-Filing and E- correspondence for cost free filing of complaints.[9] These all initiatives have advanced the mechanism of FTO and also resulted in better assistance to taxpayers.

Whereas, the National Accountability Bureau has introduced revolutionary reforms under which incomplete and anonymous complaints will be discarded at the initial level. The new guidelines have been issued for fair handling of complaints and to inject greater efficiency and transparency in NAB operations. Under the new guidelines, malafide and frivolous complaints will be considered as cognizable offence and liable to legal action against such applicants in the Courts of Law.[10]

After taking recent initiatives, FTO and NAB have modified their mechanism. But one has precedence over the other with regards to power or authority. Unlike NAB, FTO can order for implementation of its orders and those shall be binding. Except this, FTO is only answerable before the President and also designated with vast jurisdiction. Furthermore, the recent paperless environment has enhanced the efficiency of FTO. However, Chairman NAB has all the powers to hold the culprit accountable and all the powers of an officer-in-charge of a Police Station under the Code. He also has the power to arrest any person for the purpose of investigation. But he can not punish any person. Unlike FTO, the right[1]  to award sentences in cases involving NAB is vested with the Courts. Apart from some differences, there are similarities as well.

Conclusion

With this, both of the institutions are playing their roles in their specific ambit and thereby contributing to a more transparent and accountable governance system in Pakistan. FTO protects all the rights of taxpayers and ensures transparency and accountability of tax sector employees by their strategic mechanism so as to ensure justice and quick remedies for aggrieved taxpayers. Whereas, NAB on the other hand, ensures transparency and accountability of government officials or revenue keepers so as to make sure that the taxes of the people may utilize the best side by following their exceptional mechanism. In short, both institutions are playing their respective roles in ensuring and upholding justice principle and ensuring transparency and accountability which can efficiently improve the governance system of Pakistan. Furthermore, by analyzing the recent advancements particularly in FTO’s  mechanism, it proves their efficiency and commitment to solve the issues pertaining to maladministration.

[1] Section 4, Federal Tax Ombudsman Ordinance, 2000

[2] FBR/Home/Federal Tax Ombudsman (FTO),https://fbr.gov.pk/federal-tax-ombudsman/81166/71155

[3] National Accountability Ordinance, 1999

[4] Section 6, National Accountability Ordinance, 1999

[5] Section 15 and 16 of FTO Ordinance, 2000

[6] Ministry of Law and Justice,https://molaw.gov.pk

[7] Section 9, Federal Tax Ombudsman Ordinance, 2000

[8] Section 18, sub-section ‘e’, NAB Ordinance, 1999

[9]FTO Special Initiatives, https://fto.gov.pk/SpecialInitiatives.aspx

[10]Ministry of Information and Broadcasting, https://moib.gov.pk/News/59766

Author:

Malik Muhammad Aqdus

Institute:

International Islamic University Islamabad

Degree Programme:

Shariah and Law 

  [1] "FTO: A BEACON OF HOPE IN TIMES OF FINANCIAL TURMOIL[2] 

Abstract[3] 

This paper examines the Federal Tax Ombudsman (FTO) in Pakistan, highlighting its pivotal role as a beacon of hope in navigating tax disputes and ensuring justice within the tax administration.The FTO was designed to address taxpayer grievances and facilitate business by ensuring timely and fair resolution of tax maladministration issues. The article contrasts the FTO's performance with that of other key institutions such as the National Accountability Bureau (NAB) and the Federal Investigation Agency (FIA), illustrating its unique contributions. It also discusses the legal empowerment of the FTO and offers recommendations for its enhancement. Ultimately, the article underscores the FTO's critical role in restoring trust in Pakistan’s tax system, advocating for its continued evolution to meet the growing needs of nation and reaffirm its status as a symbol of hope during financial challenges.   

Introduction

 In 2000 President of Pakistan constituted an institute named as Federal Tax Ombudsman by an ordinance[2]. To alleviate taxpayer's problems and difficulties and to enhance ease of doing business. Pakistan, a nation of rich culture and history, finds itself at a crucial crossroads amidst financial turmoil. Economic instability, bureaucratic inefficiencies, and rampant corruption have undermined growth and shaken public faith in institutions. In these trying times, the Federal Tax Ombudsman (FTO) stands as a beacon of hope, alleviating taxpayer grievances and fostering confidence in a just and transparent tax system.  The main function of Federal Tax Ombudsman is to ensure disposal of complaints of tax maladministration promptly, justly, fairly, independently investigated, and to rectify any injustice done to a taxpayer by actions of the tax employees of Federal Board of Revenue (FBR)/Revenue Division.Last year FTO has processed 8963[3] cases and for sure it’s a vast number of cases.

F.T.O Comparison with Other Institutes

The Federal Tax Ombudsman (FTO) was established to provide relief to taxpayers, offering a wide range of facilities, including an online complaint system and a promise to resolve disputes within two months. When taxpayers are burdened by undue penalties, delayed refunds, and unjust tax practices, the FTO acts as a lifeline for struggling businesses and individuals. By ensuring efficient and transparent handling of complaints, the FTO not only offers timely relief but also helps restore faith in the tax system, a crucial factor during economic uncertainty.

When compared to other institutions like the National Accountability Bureau (NAB) or the Federal Investigation Agency (FIA), the FTO stands out for its focus on consumer protection and speed in delivering justice. While NAB addresses corruption on a larger scale and FIA enforces laws related to smuggling, narcotics, and immigration, The FTO's work directly impacts taxpayers' daily lives. Specialized ombudsmen like the Banking and Insurance Ombudsman serve specific sectors.

The FTO offers easier access to justice, with complaints lodged online contrasting with the lengthy paperwork and procedural delays typical of institutions like NAB and FIA. Most significantly, the FTO has a proven track record of resolving cases within months, while other institutions often see cases drag on for years. The FTO's ability to secure refunds, remove unlawful penalties, and prevent overcharges provides direct financial relief, offering much-needed stability during times of economic turmoil.

This consumer-focused approach, coupled with swift resolutions, distinguishes the FTO as a beacon of hope in Pakistan's often complex and slow-moving justice system. By ensuring fairness and protecting taxpayer rights, the FTO plays a vital role in restoring public confidence in the country's tax system, which is especially crucial during times of financial hardship.

F.T.O Empowerment by Laws

F.T.O[4] [4] was formed by an ordinance issued by President of Pakistan in 2000. Empowered by laws that grant it significant judicial authority, the FTO operates with the independence needed to swiftly address complaints, even when the country is facing financial challenges. This legal framework ensures that taxpayers have a reliable and accessible avenue for justice, making the FTO a cornerstone in maintaining financial stability Other than that, it is also supported by article 37 of Constitution of Pakistan [5]This aligns with the separation of Pakistan's judiciary[6] and executive[7] branches in accordance with the Constitution. It is regulated by the Establishment of the Office of Federal Tax Ombudsman Ordinance of 2000[8], the Federal Ombudsmen Institutional Reforms Act of 2013[9], and the Federal Tax Ombudsman Investigation and Disposal of Complaints Regulations of 2001[10]. The FTO has great power already provided by the law as its decision can only be reviewed by President of Pakistan. The F.T.O have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (Act V of 1908),[11] in respect of the following matters, namely: -

(a) summoning and enforcing the attendance of any person and examining him on oath;

 (b) compelling the production of documents;

 (c) receiving evidence on affidavits; and

(d) issuing commission for the examination of witnesses

The F.T.O or any assigned staff has also power to enter any premises and search it for evidence As well as the Federal Tax Ombudsman shall have the same powers, mutatis mutandis, as the Supreme court has power to  punish any person for its contempt.

Sectorial Study and F.T.O Jurisdiction

The FTO has jurisdiction to hear cases related to malpractice by employees of the Federal Board of Revenue (FBR), covering all sectors that pay taxes to the FBR. While it doesn't focus on specific industries, its jurisdiction spans sectors that contribute through income tax, sales tax, and duties, including major contributors like the IT, manufacturing, and trade sectors.

[12]

According to the Sales Tax Act[13], these sectors, with the exception of agriculture, fall under FBR’s tax domain, and therefore, the FTO’s jurisdiction.

To understand the sectors under the FTO’s purview, it’s essential to first grasp how the FBR operates. The FBR collects various types of taxes, and the FTO's role is to address grievances and disputes arising from these federal tax collections. However, matters related to provincial tax boards or non-tax-related customs disputes fall outside the FTO's jurisdiction, as the FTO focuses solely on resolving issues related to taxes collected by the FBR.

By providing clarity, justice, and quick resolutions to tax disputes across these major sectors, the FTO serves as a beacon of hope for businesses and individuals facing financial strain due to bureaucratic delays or unjust tax practices, particularly during periods of economic turmoil

[5] Tips For Improvement of F.T.O

F.T.O an institute working with excellent performance over the years and every year it has record numbers of solutions of disputes/cases leading among the other ombudsman and Federal Investigation Agency, National Accountability Bureau yet several improvements needed.  

Some tips are as such

1. More Public Engagement

         F.T.O should make public campaigns and public engagement for active by which F.T.O will become more common in public, and it will help more.

2. Streamline the process

                        The FTO's online complaint system is efficient, but improving its user-friendliness and further reducing processing times would enhance accessibility. Streamlining procedures and easing the filing process would encourage more consumers to seek justice through the FTO without fear of lengthy court processes

3. Collaborate Closely with FBR

As Pakistan’s financial challenges evolve, so must the FTO. Collaborating more closely with the Federal Board of Revenue, the FTO can ensure that it continues to be a beacon of hope for taxpayers. Strengthening the institution will further solidify its role in protecting citizens from the damaging effects of financial instability.

    4. Strengthen Legal Framework:

The FTO should work closely with the government to regularly update and reform tax-related laws, ensuring they remain consumer-friendly and responsive to changing needs. An evolving legal framework is essential to safeguard taxpayer rights and maintain fairness.

  Conclusion

The Federal Tax Ombudsman (FTO) stands as a crucial institution for justice and equity in tax administration, especially during times of financial turmoil. By addressing taxpayer complaints promptly and fairly, the FTO fosters trust in the tax system and promotes consumer protection. While there is always room for improvement, such as increasing public awareness, enhancing operational efficiency, and strengthening collaboration with the FBR, the FTO remains a beacon of hope for taxpayers. As Pakistan faces economic challenges, the FTO's role in providing swift, transparent, and convenient settlements for tax complaints is vital in restoring faith in the system and supporting the financial well-being of its citizens.

[1] Iqra Kanwal, Talha Irshad, and Umair Riaz are dedicated law students at IUB BWP, known for their diligent approach to their studies and their commitment to the field. Their collaboration on this article reflects their passion for contributing to the academic discourse.

[2] https://fto.gov.pk/assets/img/fto_Ordinance_2000-_4th_draft_a.pdf

[3] FTO Annual Report 2023

[4] Federal Tax Ombudsman

[5] Constitution of Islamic Republic of Pakistan 1973

[6] https://en.m.wikipedia.org/wiki/Judiciary_of_Pakistan

[7] https://en.m.wikipedia.org/wiki/executive_of_Pakistan

[8] F.T.O Ordinance 2000

[9] Federal Ombudsmen Institutional Reforms Act of 2013

[10] Federal Tax Ombudsman Investigation and Disposal of Complaints Regulations of 2001

[11] Code of Civil Procedure, 1908 (Act V of 1908)

[12] https://www.dawn.com/news/1621331

[13] Sales Tax Act

Authors:

·         Talha Irshad

·         Iqra Kanwal

·         Umair Riaz

Institute:

Islamia University of Bhawalpur

Degree Programme:

LLB 

Federal Tax Ombudsman (FTO): An Exploration of the Jurisdiction and Exemption

INTRODUCTION[1] 

This research article deals with the jurisdiction and role of the FTO in various sectors such as agriculture, IT, tourism, and services. This research article not only discusses the sectors that fall within the jurisdiction of the FTO but also the sectors that are exempted from its jurisdiction i.e. provincial tax matters, matters already under judicial review, and international trade matters, in addition to explaining why the FTO does not have jurisdiction over these sectors.

FEDERAL TAX OMBUDSMAN

The FTO is an autonomous and independent institution of Pakistan, constituted under the Federal Tax Ombudsman Ordinance, 2000. It has vast powers and can deal with matters such as malpractice by the Federal Board of Revenue (FBR) and complaints regarding the administration of federal taxes including sales tax, customs duties, income tax, federal excise duties, etc. Additionally, it can investigate dénouements related to delays in issuing refunds and improper or unjust tax assessments.[1]

JURISDICTION OF THE FTO IN VARIOUS SECTORS

FTO has vast authority that can be exercised in various sectors of Pakistan such as agriculture, IT, tourism, and services. Discussed below is the jurisdiction and role of FTO in some of the sectors of Pakistan:

Agriculture

Being the backbone of Pakistan’s economy, the Agriculture sector is exempted from certain taxes; however, some taxes such as sales tax on the items used in agriculture, are imposed. Due to these taxes, the agricultural industry falls under the jurisdiction of FTO. In the agricultural sector, complaints may arise regarding the improper tax assessments by the FBR, imposition of sales tax on agricultural items like fertilizers, delays in tax refunds, any inappropriate use of authority by tax officials, and issues concerning the subsidies provided by the government. All the complaints regarding the aforementioned issues are investigated and addressed by the FTO to ensure the smooth and effective functioning of the agriculture sector.[2]

Information Technology 

The IT sector is imposed with certain taxes; yet, it also enjoys tax incentives like exempting IT experts from taxes and reduced taxes for the IT companies. This creates the jurisdiction of FTO in the IT sector. The issues regarding the verification processes, documentation of aforementioned exemptions, delays or denials in recognizing the same, imposition of sales tax on certain IT services, their refunds, and applicable tax rates, may arise. FTO addresses all the complaints regarding taxes in the IT sector and the exemptions in these taxes, providing a platform for redressing grievances.[3]

Tourism

Tourism, a vital sector with significant potential for economic growth, is administered with tax regulation; however, tax incentives are provided to tourism-related businesses such as hotels, tour operators, and travel agencies.  By resolving the issues regarding the eligibility for tax incentives, disputes of tax liabilities, sales tax on tourism services, determination of tax rates, delays in tax refunds, and disputes over the classification of services for tax purposes, the FTO exercises its jurisdiction over the tourism sector.[4]

Services

The services sector which encompasses a wide range of industries including healthcare, education, finance, and telecommunications,  is subject to federal taxes such as sales tax, withholding tax, and income tax. To resolve the disputes/complaints regarding the delays in processing tax refunds, withholding tax obligations, improper assessment of taxes, delays in tax refunds, determination of tax rates, and assessment of tax liabilities, FTO exercises its jurisdiction to address these grievances and provide redressal/remedy.[5]

THE SECTORS EXEMPTED FROM FTO’S JURISDICTION

The powers and authorities of FTO are not absolute but are limited only to issues concerning the administration of federal taxes. In the same fashion, not all the sectors fall within the jurisdiction of FTO; there are some exceptions as well. Discussed below are some of the industries that are exempted from the jurisdiction of the FTO and the reasons for exemptions.[6]

Provincial Taxes

FTO has jurisdiction over federal taxes; however, taxes that are under the provincial government authority such as provincial sales tax on services, agricultural income tax, and property tax, are beyond the FTO’s jurisdiction. The reason for the exemption of provincial taxes is that the Pakistani constitution provides for the separation of powers. These tax matters are under the provincial government authority and are dealt with by the provincial institutes, while FTO is a federal institute. Additionally, provincial taxes are exempted to prevent the overlapping of the jurisdiction and conflicts between the federal and provincial authorities regarding jurisdiction.[7]

Matters Being Litigated/Judicially Reviewed

The issues that are already being litigated or are under judicial review are outside the FTO’s jurisdiction. This is done mainly to respect the independence of the judiciary which is an independent branch of government. Moreover, this also prevents conflicting decisions by FTO and courts, maintaining legal certainty and consistency.[8]

Legislative Matters And Government Policy Decisions

FTO lacks jurisdiction over the legislative process and government policy decisions regarding introducing new taxes, tax rates, and other tax policies because these are the powers/tasks of parliament and government. In addition, this exclusion helps maintain the neutrality of FTO as an administrative body and prevents it from being drawn into political controversies/debates.[9]

International Trade Matters

Disputes about the taxes on import and export and customs duties are not under the jurisdiction of FTO because international trade disputes are often governed by international treaties, involve diplomatic negotiations at the government level, and are resolved through specialized forums like the World Trade Organization (WTO) or Bilateral Arbitration Panels.[10]

National Security Matters

Any tax-related disputes that involve national security do not fall in the ambit of FTO’s powers and authorities for the reason that national security matters involve confidential information and are sensitive; therefore, these matters are handled by authorized government authorities that are experts in this regard. Moreover, this separation of jurisdiction ensures that the FTO is not involved in confidential matters and that its investigations do not compromise sensitive information and national security.[11]

Internal Administrative Matters of FBR

FTO does not have jurisdiction over the administrative matters of FBR such as internal audits, implementation of administrative policies, and personal management. This helps to maintain the operational autonomy of FBR and ensure that internal affairs are managed effectively. FTO mainly focuses on remedying the issues regarding tax administration and does not interfere in the internal functioning of the FBR.[12]

CONCLUSION

FTO is a federal institution exercising jurisdiction to ensure accountability, fairness, and transparency concerning federal taxes across various sectors of Pakistan. FTO provides a platform that addresses the grievances of the Pakistani citizens affected by the tax issues and effectively resolves the problems creating efficiency in the tax system. However, the jurisdiction is not limitless; certain sectors do not fall within the jurisdiction of the FTO. These exemptions are deemed to be essential as they help to promote respect for the separation of powers and autonomy of different institutes working within Pakistan.

[1] Hussain, T. ‘The Role of Ombudsman in Improving Public Service Delivery in Pakistan’. (2010). Strengthening the Ombudsman Institution in Asia: Improving Accountability in Public Service Delivery through the Ombudsman, Asian Development Bank. 232, 234.

[2] Sarfraz, S.  Federal Tax Ombudsman’s Powers, Jurisdiction Explained. (2022) Business Recorder.

[3] Waseem, M.  ‘Independence of Ombudsmen’. (2010). Strengthening the Ombudsman Institution in Asia: Improving Accountability in Public Service Delivery through the Ombudsman, Asian Development Bank. 57, 78-80.

[4] Sarfraz, S.  Federal Tax Ombudsman’s Powers, Jurisdiction Explained. (2022) Business Recorder.

[5] Hussain, T. ‘The Role of Ombudsman in Improving Public Service Delivery in Pakistan’. (2010). Strengthening the Ombudsman Institution in Asia: Improving Accountability in Public Service Delivery through the Ombudsman, Asian Development Bank. 232, 238.

[6] Federal Board of Revenue. Bar on jurisdiction of FTO.

[7] Hussain, T. ‘The Role of Ombudsman in Improving Public Service Delivery in Pakistan’. (2010). Strengthening the Ombudsman Institution in Asia: Improving Accountability in Public Service Delivery through the Ombudsman, Asian Development Bank. 232, 242.

[8] Waseem, M.  ‘Independence of Ombudsmen’. (2010). Strengthening the Ombudsman Institution in Asia: Improving Accountability in Public Service Delivery through the Ombudsman, Asian Development Bank. 57, 69-72.

[9] Jaffry, A.  Fair Tax Monitor 2018, Pakistan. (2018). Henrique Alencar Oli Pearce. OXFAM. 28-29.

[10] Shafqat, U.,Deeba, F.and Akhter, S. ‘Access to Justice through Mediation in Tax Disputes: A Case Study of Pakistan’. (2022) Vol. 23 No. 2. Pakistan Vision, 23, 34.

[11] Scope of jurisdiction of Federal Tax Ombudsman. (2005). Business Recorder. (The writer is a Retired Federal Secretary and Ex-Advisor-in-charge Research Development and Study Cell Office of the Federal Tax Ombudsman)

[12] Hussain, T. ‘The Role of Ombudsman in Improving Public Service Delivery in Pakistan’. (2010). Strengthening the Ombudsman Institution in Asia: Improving Accountability in Public Service Delivery through the Ombudsman, Asian Development Bank. 232, 245-249.

Author:

Amna Ramzan

Institute:

Fatima Jinnah Women University, Rawalpindi

Degree Programme:

LLB (Hons)

The Federal Tax Ombudsman (FTO): A Comprehensive Analysis

The[1]  Federal Tax Ombudsman (FTO) is a key player in enhancing the accountability and

transparency of tax management by the examination of several facets, as this article intends to give a comprehensive grasp of the FTO's missions, of its regulatory rank compared to the rest of the public authorities, its inherent legal framework, and its territorial reach, and the openings for reform its presented.

1. Comparative Analysis of FTO with Other Governmental Institutions

The FTO which has been established under the FTO Order of the Tax Code, 2000, to handle complaints by taxpayers against the local tax administration. As opposed to tribunal, which has extensive authority in both civil and criminal cases, the Ombudsman's authority only brings

them closer to the tax and personal grievances. Representatively, the FIA (Federal Investigation Agency) and NAB (National Accountability Bureau) which prosecute general as well as

corruption cases, the FTO prefers dispute adjudication in a non-conflict way. While being a self-governing entity, the FTO lacks the NAB's or FIA's punitive powers, e.g., detention and prosecution

One[2]  of the processes the FTO uses to work on complaints is a relatively informal method that centers around mediation and negotiations first. In this procedure, on the one hand, the formality of the courts' legal proceedings and the fact-finding processes of FIA and NAB are

diametrically opposed to this. Rather, when a complaint is received, the FTO will usually arrange a dialogue between the taxpayer and the tax authority to amicably resolve the issue.

Conversely, the FIA and NAB employ numerous strict measures and procedural protocols as well as may use prosecution, if necessary.

FTO’s performance examining from other institutions is inconsistent. The FTO's reports show that, in fact, most of the complaints resolved by it are resolved through the process of

alternative dispute resolution, such as mediation, conciliation, and negotiation. In addition,

institutions like the legal bodies and NAB have a stronger implementation process but since they face more legal troubles they take a lot of time to deliver services.

The FTO in past times has tried out many activities to make the service delivery such as the

launch of an online complaint management system and the organization of campaigns through which taxpayers were told the information that they should know. These are the same steps as in other institutions, for instance NAB`s plea bargain system and the FIA's technological

upgrades for better case management.

2.       Legal Analysis of FTO's Empowerment through Law

The Federal Tax Ombudsman's authority and responsibilities are given in the Federal Tax

Ombudsman Ordinance, 2000. This legal framework accords to the Ombudsman the power to

investigate and propose solutions as well as make recommendations directly to the President of Pakistan. However, the FTO's directives are not obligatory, thus affecting its resourcefulness. A

thorough legal study finds that while the Federal Tax Ombudsman is well enough empowered to deal with tax misconduct, it still has some holes in its law enforcement capabilities that require the amendment. Specifically, unlike the judiciary, the FTO does not have the power to impose fines and compel the implementation of its decisions, which could conceivably compromise its function as an effective oversight body.

3.       Sectoral Studies: Jurisdiction of FTO in Various Sectors

Agricultural Sector

The FTO is a key facilitator in the tax assessment rigmarole prevailing in the agricultural sphere, dealt with particularly thorny issues like land valuation disputes and tax exemptions. On the examination of the performance of FTO in this field, I have discovered that though the body is doing its best to resolve matters, in many instances, it is limited in its ability to act due to the

lack of knowledge among the people int the villages about its functions.

IT Sector

In the IT sector, the FTO takes care of issues regarding the tax and e-commerce of digital

services. The FTO has achieved fast growth in this sector, and the international tax legislation is of a complicated nature, these are among the main obstacles that the sector is facing. The FTO has taken steps to resolve this issue. However, there is a need for more professionals who have

firsthand experience to operate and more appropriations to resolve the vague sides of digital taxation.

Tourism Sector

Another industry that the FTO has jurisdiction in is the tourism industry, consisting of hospitality services and travel agencies. The fact that the FTO handles well the disputes pertaining service tax and other levies is an indicator of the organization's good functionality in this area.

Nevertheless, the issue of businesses coming and going which is typical of tourism often causes both tax law enforcement and dispute resolution to be complicated.

Services Sector

The FTO extends its authority to the entire services sector, that includes professional and financial services. The FTO is focused on the issues such as the differences in the tax assessments, application of service taxes, and the like. Although the FTO was successful in many matters, it is lacking in resolution and stability and there is a need to improve its jurisdictional reach and capacity to be competitive with the immense structural changes and diversity of services sector.

4.    Sectors Exempt from FTO's Jurisdiction

As per the regulatory framework and disposition, there are certain sectors that fall outside the jurisdiction of Federal Tax Ombudsman (FTO). These exclusions are mainly for protection of national security and confidentiality. For example, for the banking sector, the State Bank of Pakistan (SBP) is its regulator and hence FTO has no right to investigate banking practices. This also includes investigations overlapping with SBP regulatory responsibilities.

In addition, industries pertaining to defense, military operations as well as other areas of vital importance for the nation’s safety are not included in FTO’s scope. The purpose of these exceptions is to ensure that sensitive information always remains confidential. Despite these limitations, this creates a situation for the stakeholders of these sectors, who might be deprived of a separate channel to address their tax issues. An analysis of these work-free zones indicates the necessity for including FTO's jurisdiction or setting up special ombudsman offices to cover the existing lacunas.[3] 

5.       Recommendations for Improving FTO Laws and Efficiency

To make sure the FTO becomes more effective, the following proposals need to be included from the analysis above.

●     Legislative Amendments[4] : Instead of changing the current ordinance to give the FTO compulsory authority, emphasis must be directed towards enhancing the present appraisal procedures. With the allowed amendment to the ordinance noted above, the FTO’s power and capacities can be even furtherexpanded by the proposal of a proper appeal or review procedure. This would mean that the contentious issues should be dealt with in either the court or in specialized tax courts so as to guarantee fairness in disposition of the cases besides observing the dictates of transparency.

●     Procedural Reforms[5] : Thus, improvements should target the explication of the efficacy of complaint resolution on the basis of ongoing changes. For instance, the type of access that might be granted to the complaint may be the number of days his or her complaint will be reviewed (e. g. 10 days). For better co-ordination between different government departments, it is possible to design a computerized system which can integrate the complaint management system and can provide real time information update. This would shorten the time taken in providing the resolutions, and also enable effective cooperation between the agencies.

● Capacity Building[6] : Training and development will have the required funds to be put in place to achieve the following staff in company understanding of specific tax matters, especially in the technology and digital services sectors.

●     Stakeholder Engagement[7] : The increase of the number of events and information means that many taxpayers will learn about what the FTO does and how it can help them. The activities may include holding open meetings, designing focused publicity and the use of industry organizations to build confidence and awareness.

These reforms could substantially enhance the FTO's capacity to operate as a truly effective oversight entity and in addition to this, introducing a quality and efficient tax administration system in Pakistan.

References

1.     Federal Tax Ombudsman Ordinance, 2000. Government of Pakistan.https://www.fto.gov.pk/wp-content/uploads/2020/07/FTO-Ordinance.pdf

2.     FTO Annual Report 2022. Federal Tax Ombudsman, Pakistan.https://www.fto.gov.pk/annual-report-2022/

3. National Accountability Bureau (NAB) Annual Report 2022. National Accountability Bureau, Pakistan.https://www.nab.gov.pk/Downloads/Annual%20Reports/Annual_Report_2022.pdf

4. "Comparative Analysis of Ombudsman Institutions." Asian Ombudsman Association, 2019.https://asianombudsman.com/resources/reports/comparative-analysis-of-ombudsman-institutions-2019

5. Khan, M. A. (2021)."The Role of Federal Tax Ombudsman in Pakistan." Journal of Taxation and Governance, 15(3), 45-63.https://journals.sagepub.com/doi/full/10.1177/21582440211040160

6. Ahmed, S. (2022). "Taxation in Pakistan: Challenges and Reforms." Institute of Policy Studies, Islamabad.https://www.ips.org.pk/taxation-in-pakistan-challenges-reforms/

Author:

Nabeela Mohiud-din

Institute:

International Islamic University Islamabad

Degree Programme:

Shariah and Law