KARACHI PAKISTAN: Six months after the implementation of the Tax Laws (Amendment) Act 2024, Pakistan’s tax appeal system has reportedly entered a phase of dysfunction, leaving Rs. 2.7 trillion in tax litigations in limbo. The Pakistan Tax Bar Association (PTBA) has raised alarm over the situation, citing inefficiencies, delays, and growing costs as major concerns in a letter addressed to the Minister for Law and Justice.
ATIR Working Severely Affected
The PTBA highlighted significant operational issues within the Appellate Tribunal Inland Revenue (ATIR), the top forum for tax appeals before the judiciary. Staffing shortages have left key benches in major cities operating at less than half capacity. For instance, Karachi, the financial hub, has only four tribunal members against the required twelve.
In addition to staffing woes, operational inefficiencies have further hampered ATIR’s functionality. Tribunal benches reportedly work shorter hours, starting at 11:00 AM and closing by 3:00 PM, instead of adhering to standard High Court timings.
Manipulated Case Disposal and Backlogs
The PTBA alleged that the tribunal is manipulating case resolution statistics by treating extensions of stay orders as resolved cases. Furthermore, older cases dating back to 2014 are being sidelined in favor of newly filed disputes, worsening the backlog.
“The backlog of cases is swelling uncontrollably, while taxpayers are left struggling with a dysfunctional forum,” the PTBA stated, emphasizing the growing frustration among litigants. Business Recorder
Unfulfilled Promises of Reforms
The 2024 reform law had promised:
- Transparent recruitment of tribunal members.
- Competitive salary packages to attract qualified professionals.
- Streamlined appeal processes to reduce delays.
However, these promises remain unfulfilled, with recruitment of tribunal members yet to begin in earnest.
Financial Burden on Taxpayers
The amended appeal system has increased litigation costs significantly. A mandatory High Court reference system now requires taxpayers to pay Rs. 50,000 as reference fees for certain cases. Combined with the complexity of the new procedures and the requirement to deposit 30% of the disputed tax amount before filing references, the financial burden on taxpayers has surged.
PTBA’s Recommendations
The PTBA has urged the government to take swift action, recommending:
- Formation of an oversight committee to monitor and address inefficiencies.
- Expedited recruitment of tribunal members to meet staffing needs.
- A review of the High Court reference system and associated fees.
- Reconsideration of the 30% upfront payment requirement for filing references.
The PTBA warned that without immediate intervention, the dysfunction in the tax appeal system could undermine efforts to recover significant revenues and erode taxpayer trust in the system. Stakeholders are now looking to the government for decisive action to resolve these pressing issues.
