Daily Times

The office of the Federal Tax Ombudsman (FTO) Pakistan has observed that loopholes in Federal Board of Revenue (FBR)’s computer assisted system for filing Goods Declarations can possibly cause a heavy loss to the national exchequer.

The office of the FTO has said that FBR failed to identify vulnerabilities in Risk Management System (RMS) parameters and loopholes and weaknesses in WeBOC (Web Based One Customs) system – computerized Customs Clearance System.

The FTO office disclosed in its findings that third party assessment of WeBOC has not been carried out since its deployment in 2012; hence, the FTO has recommended the FBR to consider hiring services of firms for third party assessment of the system without delay.

Shahid Ahmad (Advisor to FTO), in a newsletter, disclosed that in an own motion investigation case of recovery of smuggled mobile phones of one billion rupees, the FTO office observed that it appears that prima facia FBR failed to identify vulnerabilities in RMS parameters and loopholes and weaknesses in WeBOC.

According to details, in response to the notice by FTO Office, issued to Secretary, Revenue Division, the Department of Risk Management contended that imported goods are cleared through WeBOC system. The Department of Risk Management further contended that all the seized mobile phones from Lahore, Karachi and Quetta were not cleared from the port through misuse of the Green Channel facility. However the observation of FTO Office was acknowledged that risk factors of RMS need regular review. It was also recognized that a well-defined maintenance process (i.e. regular and update of key system parameters) of risk management system is critical per international RMS best practices.

The FBR had constituted a Risk Management Unit (RMU) for identifying, assessing, monitoring and managing the risks associated with WeBOC.

According to the FTO Office findings, the traders’ profiling system is exposed to the possibility of traders artificially building their profiles to obtain high scores that ultimately allow them to be processed through the Green Channel.

In addition, The FTO also recommended that FBR must direct Directorate General of Post Clearance Audit (PCA) to carry out post import transaction verification of GDs cleared under the Green Channel facility to satisfy the accuracy and authenticity of declarations filed by the importers through the examination of relevant books, accounting records and commercial data held by the importers and cross match their data with sales tax and income tax returns filed by the importers.

It also recommends that FBR should consider installation of scanners at Exit Gates for effective check on mis-declaration and to deter the traders who may abuse the system, and cases detected by external agencies like PCA, Directorate of Intelligence, Auditor General of Pakistan etc, must be linked with traders’ profiles so that upward and downward movements of traders’ profiles become more credible.

Published in Daily Times, February 8^th 2019.