Rs800 Billion in alleged tax dues under scrutiny, FBR faces questions over FATA and PATA exemption scheme

Around Rs1,120 billion worth of imported goods brought into Pakistan under the FATA and PATA tax exemption scheme are under scrutiny

Islamabad:  Around Rs1,120 billion worth of imported goods brought into Pakistan under the FATA and PATA tax exemption scheme are under scrutiny, while records covering goods worth only Rs389 billion have been identified so far, raising serious questions about missing documentation, possible tax evasion and the recovery of billions of rupees owed to the national exchequer.

A Senate subcommittee has expressed serious concern over delays by the Federal Board of Revenue (FBR), the failure to provide important documents and the possibility of a major loss to public money. The committee also questioned why Pakistan was seeking loans from international financial institutions while large amounts of alleged tax dues remained unresolved.

The meeting was held on November 2, 2026, at Parliament House under the chairmanship of Senator Saifullah Abro. Senator Umar Farooq and officials from the Ministry of Interior, FBR, Federal Investigation Agency (FIA), police and other departments also attended.

According to the briefing, 223 consumption certificates had been issued to 108 companies under the FATA and PATA tax exemption scheme. These certificates relate to the use of imported goods by factories. However, the committee questioned why complete records of imports, factory production, use of goods and tax payments were not available for all companies when the total value of imported goods was around Rs1,120 billion.

The committee was also told that approximately Rs85 billion required further explanation regarding its supporting documents and the legal conditions followed when goods were released after certificates were issued.

The potential tax and penalty amount under discussion was estimated at Rs400 billion to Rs500 billion, but the final recoverable amount has yet to be established through verification and legal scrutiny. The Senate press release also referred to approximately Rs800 billion in alleged tax dues whose recovery remained in question. These figures have not been confirmed as final amounts legally recoverable from the companies.

Senator Saifullah Abro strongly criticised the FBR’s performance and said that simply telling the committee that an audit was underway was not enough. He questioned how the government could continue borrowing money while failing to make clear progress on recovering potentially outstanding taxes.

He also accused the FBR of not taking tax collection seriously and said the Prime Minister was being mis briefed. He demanded that officials provide complete facts about the companies, investigations and recovery efforts instead of giving general explanations.

The senator declared that the country’s money must be recovered and warned that officials responsible for negligence or failure to protect public funds would be held accountable. He said that if investigations established tax evasion, fraud or other legal violations, those responsible must face action under the law.

The committee examined the rules for issuing consumption certificates under SRO 2021. Officials explained that companies were required to deposit a payment or pay order equal to the value of imported goods with Customs before the goods could be supplied to factories, subject to the required conditions.

The documents required for certificates included electricity and gas bills, buyers’ bank statements, company business records, employee details and other supporting information.

Senator Abro questioned why these requirements had not been properly checked before certificates were issued. He directed officials to present the certificates and supporting records of 20 major companies identified in the previous meeting. He also demanded correspondence showing which companies had faced objections and why no objections had been raised against others.

The committee directed the relevant authorities to provide the required documents within two days, including import records, Customs papers, certificates, bank statements and details of tax payments. It warned that continued failure to produce records in a case involving billions of rupees would create further doubts.

The FBR representative, Mr Taqi, told the committee that suspected cases could be selected for audit and that the documents of relevant taxpayers were being examined. He said the final revenue loss and recoverable amount could only be determined after the audits were completed. The FBR assured the committee that legal action would follow if tax liabilities were established.

However, the committee was dissatisfied with the lack of clear progress. It wanted to know how many companies had submitted complete records, how many cases had been examined and what practical steps had been taken to recover the money.

The briefing revealed that notices had been issued to 512 companies. Some had submitted complete records, while others had provided only partial information. Letters sent to 58 companies had been returned or the companies had refused to receive them.

The committee was further informed that 35 writ petitions had been filed before the Peshawar High Court and that 174 beneficiary companies had approached the court seeking relief against the FBR inquiry or related proceedings. Senator Abro directed officials to prepare complete records of the companies, their owners, business activities, notices and pending court cases.

The FIA is also conducting an inquiry into imported goods, consumption certificates, company activities and possible outstanding tax liabilities. Senator Abro called for close cooperation between the FIA and FBR, saying that evidence of financial irregularities or legal violations must be properly investigated.

Another issue involved around 20 import entries worth approximately Rs65 billion over the previous six months. These reportedly covered around 20 Goods Declarations and 19 factories. The committee ordered an initial examination of the imported goods, their use and the validity of the relevant certificates. A detailed report on five key companies was ordered by November 9, ahead of court proceedings scheduled for November 12.

The committee also directed a review of FBR performance and the nominations of relevant officers for the Sitara i Imtiaz. Senator Abro said national honours should reflect actual performance, including efforts to recover taxes and protect public money, rather than merely formal recommendations.