The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to conduct a detailed audit of a medical college that has been filing “Nil” Income Tax Returns since 2017.
Based on the multiple reported news, the FTO Secretariat initiated an Own Motion Investigation into the tax affairs of M/s. WATIM Medical & Dental College, vide OM No.0044/OM/2023.
Currently, in addition to Public Sector Medical & Dental Colleges, there are around 75 PMDC-approved Medical and 43 Dental Colleges in Pakistan. Though PMDC maintains a structured regulatory mechanism for tax matters of these private colleges have not been appropriately attended to by FBR.
During the past few years, there has been regular reporting as well in various medical-related websites about the irregularities and violations of tax laws committed by Private Medical Colleges in Pakistan.
There is maladministration regarding irregularities committed by Trusts controlling the medical colleges, especially improper compliance of withholding taxes, non-conformity with stipulations attached to NPO status, irregularities committed while issuing approvals under section 2(36) of the Income Tax Ordinance 2001, and lack of well-structured audit of withholding taxes.
The FTO office regretted that admittedly Nil Income Tax Returns have been filed for the last five years but the department didn’t bother to cross-check this state of affairs. Private Medical College is a highly lucrative business involving a high volume of annual receipts but the Corporate Tax Office’s (CTO) inaction and ineptitude are glaringly visible.
As per comments, Watim Medical College was registered in 2017 and regularly filed withholding tax statements under section 165 of the Ordinance, 2001. But in the breath, the CTO confirmed that Nil Withholding Statements have been filed.
Once again withholding of taxes at source is a blatant way to evade chargeable taxes but CTO is unmoved here as well. As per the record, no withholding audit has been conducted by the department.
Even though the College website exhibits a breakup of local receipts, and fees received from overseas and foreign students, but during the last five years, no effort has been made to cross-check with college foreign currency and PKR accounts.
The CTO has yet to look into a potential revenue-yielding case which has been in operation since 2017. FTO order added that no information has been obtained about donations received if any by the college.
As per the college website, the College maintains a highly qualified faculty but the CTO is completely blank about this aspect or tax withholding u/s 149.
The above acts of omission & commission constitute maladministration in terms of section 2(3)(ii) of the FTO Ordinance, 2000. Given the above, FBR is to direct the concerned Commissioner-lR to conduct a detailed audit of the subject college which thus far has been filing Nil Income Tax Returns since 2017.
The concerned Commissioner-IR is to enforce proper withholding statements and conduct detailed withholding audits of the previous years with special reference to Para 10 above and report compliance within 60 days.
Good. In fact all hospitals, clinics, and other medical-related bodies/offices should be scrutinized for tax purposes. They have ultra-lucrative businesses and pay zero tax.
FBR is busy squeezing overseas Pakistani and government employees. FBR has not bothered to go behind businesses and billionaires.
Coaching centres that impart MDCAT, ECAT and other trainings should also be thoroughly investigated and penalized. Coaching centres issue ghost receipts without name printed. They also under report their sales.