ISLAMABAD — The Federal Tax Ombudsman (FTO), Zafar Hijazi, has identified a critical systemic flaw within the Federal Board of Revenue’s (FBR) automated FASTER sales tax refund system, directing the tax authority to implement immediate corrective measures. The ruling was issued following formal complaints lodged by Karachi-based exporter M/s Quality Towellers. The FTO warned that the loophole is severely hurting the export sector and undermining the integrity of the automated refund mechanism by failing to distinguish between commercial export Goods Declarations (GDs) and non-commercial sample export GDs sent via couriers.
Because non-commercial samples do not require the realization of foreign export proceeds, the system incorrectly triggers a “GD Not Realised” objection. Instead of deferring only the proportionate amount related to the sample, the automated system incorrectly diverts the taxpayer’s entire carry-forward refund claim into slow, manual processing pipelines. During the hearings, Pakistan Revenue Automation Ltd (PRAL) stated that it merely receives raw data from Pakistan Customs via an automated interface and lacks the legal or technical authority to filter it out. Terming the issue a “hazardous loophole,” the FTO has ordered FBR’s Inland Revenue and Customs Wings to coordinate a joint technical resolution immediately.
