Taxpayers are not aware that the decisions of the Federal Tax Ombudsman (FTO) under the facility of the informal Alternative Dispute Resolution (ADR) mechanism are binding upon the Federal Board of Revenue (FBR).
This has been disclosed in a new study on the ADR mechanism conducted by the FTO office in collaboration with a research organization.
The study revealed that the FTO has offered the facility of ADR to the taxpayers to decide their cases of maladministration against the FBR on a fast-track basis. Most taxpayers are not aware of the facility of the ADR available with the FTO for the resolution of their tax-related disputes.
In this regard, the FTO offers a befitting and appropriate alternative in the form of “Alternative Dispute Resolution” for legal redress to the people aggrieved by the Revenue Division or its employees.
The “Tax Reform Commission” has repeatedly recommended FBR bring the ADR system under the ambit of the Federal Tax Ombudsman to redress taxpayers’ issues with the department on a fast-track basis. One of the primary reasons is that FBR’s ADR mechanism lacks neutrality and transparency due to FBR being a party of interest, the study revealed.
The study added that a major drawback of ADR is its cost, FTO covers this drawback and has made ADR the safest option for taxpayers because it is providing cost-free arbitration and other ADR services. Besides formal ADRs, FTO also provides for informal hearings where the parties usually resolve their issues within one hearing and there has also been reported compliance by Revenue Division with the final outcome. Generally, ADR decisions are not usually binding but FTO’s decisions hold a binding status on the parties. There are numerous cases of informal dispute resolutions that FTO has resolved.
Federal Tax Ombudsman informally conciliates the disputes under section 33(1) of “FTO Ordinance, 2000” which states: “Notwithstanding anything contained in this Ordinance, the Federal Tax Ombudsman and authorized Staff Members shall have the authority to informally conciliate, amicably resolve, stipulate, settle or ameliorate any grievance without written memorandum and without the necessity of docketing any complaint or issuing any official notice”.
There are a number of other complaints that FTO has resolved through informal means and all the grievances of the parties were redressed to the satisfaction. This platform is available to taxpayers free of cost and it provides quick and effective remedies.
The study highlighted that the matter is of concern that taxpayers are not sufficiently aware of the significance and institutional structure of FTO. Hence, taxpayers need to be sensitized about the efficacy of FTO. In addition, the legal community and media should also promote FTO’s role amongst the masses no that the taxpayers could get timely, speedy, and free access to justice.
It should also be emphasized that generally ADR means are not usually legally enforceable and do not hold any legal value but FTO provides not only an ADR mechanism to resolve the disputes with Revenue Division amicably, but his decisions are also legally binding and enforceable as well, the study added.
The study concluded that the forum of FTO needs to be adopted as a full-fledged mechanism of ADR in Pakistan to resolve Taxpayers’ disputes with the Revenue Division, as it provides speedy and cost-effective justice.