ADRC Mechanism for State-Owned Enterprise Tax Disputes
The Federal Board of Revenue (FBR) has implemented a new mechanism to resolve tax disputes involving state-owned enterprises (SEOs). The Statutory Regulatory Order (SRO) 1290(I)/2024 mandates that all SEOs must utilize Alternate Dispute Resolution Committees (ADRCs) to address their tax-related issues.
Key Provisions of the SRO:
- Mandatory Use of ADRCs: All SEOs are required to use ADRCs for tax dispute resolution, regardless of the tax liability amount.
- Appointment of ADRC: The FBR will appoint ADRCs consisting of retired IRS officers, chartered accountants, and other qualified professionals.
- Decision-Making Process: The ADRC will review the case and make a binding decision within 45 days, extendable by 15 days.
- Withdrawal of Pending Appeals: Applicants must withdraw any pending appeals before the ADRC’s decision becomes binding.
- Remuneration for ADRC Members: Each member of the ADRC will receive a one-time payment of Rs. 100,000 for their services.
Benefits of the ADRC Mechanism:
- Efficient Dispute Resolution: The ADRC mechanism provides a streamlined process for resolving tax disputes, reducing the backlog of cases.
- Reduced Litigation: By promoting amicable settlements, the ADRC can help minimize costly legal proceedings.
- Improved Relationship Between FBR and SEOs: The mechanism aims to foster a more cooperative relationship between the tax authority and state-owned enterprises.
Conclusion:
The FBR’s initiative to introduce ADRCs for SEOs is a significant step towards improving tax compliance and ensuring a more efficient dispute resolution process. By utilizing this mechanism, SEOs can resolve their tax-related issues in a timely and cost-effective manner.
