Cybersecurity Breach Exposes Fraudulent Activities in FBR’s Sales Tax System

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In a concerning development, hackers have successfully infiltrated FBR’s sales tax system, manipulating sales tax returns of legitimate taxpayers to claim false sales/purchases and illicitly obtain tax credits and refunds amounting to billions.

The Federal Tax Ombudsman (FTO) has taken swift action, directing the FBR to address the issue and take stringent measures against the hackers responsible for orchestrating this fraudulent activity. The FTO has issued immediate directives to the FBR, urging them to combat these unscrupulous individuals exploiting vulnerabilities in the tax system.

A complaint has been formally filed against the Member IR (Operations) FBR and Director Intelligence and Investigation (IR) Karachi, invoking the Federal Tax Ombudsman Ordinance 2000 (FTO Ordinance). The allegations center around the failure to resolve the deletion of fabricated purchases and sales, fraudulently added to the annexures of the Sales Tax Return of the Registered Person (RP) for September 2023 by these malicious actors.

The complainant, engaged in the business of Paper and Paper Board products, and assessed to tax at RTO-1, Karachi, discovered unauthorized changes to their login password. The hackers, in an attempt to cover their tracks, also altered the complainant’s mobile number and email address, hindering password recovery.

Upon realizing the breach, the complainant promptly contacted the tax office in Karachi, where an FBR’s official assisted in updating their mobile and email details and recovering the password. However, upon accessing their IRIS account, the complainant was shocked to find that their sales tax return for September 2023 had already been submitted with substantial fake purchases and sales in the relevant annexures.

Seeking immediate redress, the complainant requested the removal of the fraudulent entries from their sales tax return. Additionally, they highlighted the adverse impact on their business operations, as the unresolved issue prevented them from submitting sales tax returns for subsequent periods, causing a significant halt and hardship for their business.

The complainant alleges that despite their formal request, the department failed to take appropriate action, prompting them to escalate the matter through this complaint. The incident underscores the urgency for robust cybersecurity measures within government systems to safeguard sensitive taxpayer information and maintain the integrity of financial transactions. The FBR is now under pressure to swiftly rectify the security breach and bring the perpetrators to justice.

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