ISLAMABAD – The Cryptocurrency market mushroomed over the years with many countries setting up their reserves and managing the digital currency in which transactions are verified and records maintained by a decentralized system.
Amid growing trend in Pakistan, Federal Tax Ombudsman (FTO) called on Federal Board of Revenue (FBR) to clarify its tax policy regarding income and ownership derived from virtual currencies. This call follows a complaint filed by a local cryptocurrency user, highlighting growing number of active crypto users in Pakistan and the absence of a formal tax framework for this sector.
FTO responded to complaint filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000, urging apex tax collection agency to look into the tax implications of cryptocurrency transactions. The complainant pointed out that Pakistan ranks sixth globally in cryptocurrency adoption, with over 9 million active users, yet the sector remains entirely undocumented and tax-free.
Referring to stance of SBP, which was upheld by the Sindh High Court (C.P No. 7146/2019), the complainant emphasized that virtual currencies have not been declared illegal.
Despite multiple notices issued for hearings, FBR’s policy wing failed to attend the proceedings. In its written response, the FBR argued that taxing cryptocurrency falls outside the FTO’s jurisdiction, a claim that the FTO rejected, emphasizing that this issue falls under maladministration as defined in Section 2(3)(ii) of the FTO Ordinance, 2000.
FTO also criticized FBR for its inaction, stating that “it is the height of negligence, disregard, and incompetence on the part of the FBR that, instead of addressing this neglected area, they are challenging the FTO’s jurisdiction on technical grounds.”
It further mentioned that transactions worth tens of million are occurring through cryptocurrency platforms without documentation or taxation, which needs to be tracked for official record.
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