Chief Financial Officers Disappear Fearing FBR Raids Due to Tax Fraud

After the recovery of nearly Rs. 700 million from a leading exporter of Faisalabad, the Federal Board of Revenue (FBR) is now searching for other Chief Financial Officers (CFOs) of companies involved in sales tax fraud. An interesting development is that many Chief Financial Officers (CFOs) of companies involved in sales tax fraud have disappeared from the market due to fear of arrest by the intelligence agencies of the Federal Board of Revenue (FBR). Only in one case, a huge amount of evaded sales tax (principal amount and penalty) has been deposited by a leading textile exporter of Faisalabad. The revenue loss caused by the fraudulent practices involving a gang of fraudsters runs in hundreds of millions of rupees to the national exchequer. The FBR has asked the CFOs to pay the due amount of unpaid taxes of billions including principal amount and additional tax/penalties to avoid prosecution, sources revealed. CFOs of the fraudulent companies have apprehended that their turn would be next after the arrest of Chief Financial Officers (CFOs) of companies involved in tax fraud. Most of the CFOs allegedly involved in sales tax frauds have escaped or hiding to avoid raids or enforcement actions of the FBR’s agency. This is also hampering the ongoing exercise of the agency against the fraudulent units across the country. There is a strong fear among these CFOs that they would be arrested due to fraudulent activities committed in the past. These CFOs are well aware that the political backing behind this enforcement exercise against the tax evaders would ultimately result in their arrest and prosecution in courts, officials added. The Regional Directorates of Intelligence & Investigations Inland Revenue arrested five accused across the country including one of the leading fraudsters engaged in creating chains of dummy businesses and four members of top management of end users/beneficiaries (CFOs) responsible for the tax fraud involving billions of sales tax loss to the national exchequer. These arrests have been executed in the wake of the country-wide crackdown against the organized mafia and beneficiaries involved in sales tax fraud and in line with FBR’s enforcement measures to enhance tax compliance. This is the first time that the CFOs of big textile companies have been arrested.