ISLAMABAD, August 9, 2025 – The Federal Tax Ombudsman (FTO) has taken a decisive stance against cyber-enabled tax fraud, directing the Director General Intelligence & Investigation (I&I) Inland Revenue to identify and prosecute cybercriminals responsible for introducing fake supplies into the sales tax system through compromised IP addresses and VPN use.
The case came to light when a 68-year-old commercial importer discovered that cybercriminals had illegally accessed his password ID, fraudulently filing a sales tax return for April 2025. The fraudulent filing introduced fake supplies worth Rs133.125 million through Annexure-C, with a GST impact of Rs23.962 million, triggering downstream issues in subsequent tax periods.
The FTO deemed the act a clear case of maladministration and tax fraud, ordering the FBR to ensure registration of FIRs in line with SOPs for fake/flying invoices, pursue prosecution, and build capacity to unmask original VPN-using offenders. The probe also identified M/s Rafi Enterprises, a taxpayer of RTO Quetta, as a deliberate beneficiary of the fake transactions without any physical movement of goods, in violation of Section 73 of the Sales Tax Act.
As a direct consequence of the FTO’s intervention, the Federal Board of Revenue (FBR) has now issued a stern warning to telecom operators and internet service providers (ISPs) for failing to provide subscriber details linked to suspicious IP addresses. In one instance, a fraud-linked IP traced to Battagram via Zong (CM Pak Ltd) remained unverified despite repeated FBR requests. Other addresses linked to Islamabad and Frankfurt (via a likely VPN) also remain under investigation.
Under new provisions in the Sales Tax Act, effective July 1, 2025, telecom companies and ISPs are legally bound to share accurate subscriber details with tax authorities for fraud investigations. Failure to comply will result in legal action. The FBR has also announced plans to strengthen security on its online portal to curb VPN-based identity masking.
The back-to-back actions by the FTO and FBR mark a coordinated crackdown on cyber-enabled tax fraud, reinforcing the Ombudsman’s role as a catalyst for systemic accountability and stronger enforcement across government institutions.
