Approval and appointment of certification agencies

Government of Pakistan Revenue Division Central Board of Revenue . . * Islamabad, 30th August, 2004. N o t i f i c a t i o n (Income Tax) S.R.O.745(I)/2004. - In exercise of the powers conferred by sub-section (1) of section 237 of the Income Tax Ordinance, 2001 (XLIX of 2001), the Central Board of Revenue is pleased to direct that the following further amendments shall be made in the Income Tax Rules, 2002, the same having been previously published as required by sub-section (3) of the said section. In the aforesaid Rules, after rule 220A, the following new rule shall be inserted, namely: - “220B. Approval and appointment of certification agencies. - (1) Whereas rules 211 to 220A, both inclusive, provide for performance evaluation of non-profit organizations with regard to their aims and objectives during the last three years by approved independent certification agencies, the procedure given in the following sub-rules shall apply in respect of approval and appointment of such certification agencies. (2) The Chairman, Central Board of Revenue, shall, in his discretion, constitute a Committee for approval and appointment of certification agencies, hereinafter referred to as the Committee, comprising of not less than three members. The Chairman, Central Board of Revenue shall also designate a member of the Committee to serve as its Chairman. All nominations to the Committee shall be ex-officio. One third of the membership or two members of the Committee, whichever is larger, shall constitute the quorum for meetings of the Committee. (3) An application for approval and appointment as a certification agency shall be placed before the Committee. (4) The Committee shall consider the application on its own merit and decide through a majority vote. The Chairman of the Committee shall caste a vote only in case of a tie. (5) In its deliberations on the application, the Committee shall consider, inter alia, the following criteria, for approval and appointment of certification agency, namely:- (a) Demonstrated and established eminence, credibility and stature of the governing body of such organization that brings respect and credibility to the organization and its work; (b) understanding of the organization, essentially the senior management and program staff, of the parameters of evaluation as approved by the Central Board of Revenue; (c) human resource, quantity as well as quality, available with the organization to conduct professional, objective and transparent evaluations of non-profit organizations; (d) financial resources available with the organization for meeting the costs incurred on such evaluations; (e) organizational understanding and experience of working with the non-profit organizations; (f) experience of evaluating non-profit organizations or social programs; (g) systems put in place by the organization to conduct evaluation and award of certification; and (h) monitoring mechanisms to ensure transparency and objectivity. (6) The Committee may call for any document, report and statement from the organization concerned to assess the capacity of the organization to undertake professional, objective and transparent evaluation as per the criteria specified in sub-rule (5). The Committee may also interview the managerial and program staff of the organization to assess their level of experience, understanding and professionalism. (7) In no case, however, the committee shall decide to authorize an organization which -- (a) is not registered in Pakistan under any of the relevant laws; (b) does not specifically prohibit distribution of profit, if any, to its members or staff; (c) is controlled in part or wholly by the Federal Government, Provincial Government or a local Government; and (d) in its other programmes create a conflict of interest in evaluating non-profit organizations. Explanation: - A grant-making organization would have a conflict of interest if it undertakes evaluation and certification of its grant-recipient or potential-recipient organizations. Similarly, a capacity building organization, evaluating non-profit organizations whose capacity it has built or may build in future, would be in a conflict of interest situation. (8) An application received by the Committee may be decided upon within a period of three months from the date of the receipt of such application. (9) An applicant adversely affected by any decision of the Committee may file an appeal before the Member (Direct Taxes), Central Board of Revenue, within thirty days of the service of the decision upon the application. (10) The approval and appointment of an organization as a certification agency shall be notified in the official Gazette. (11) An approval and appointment granted under this rule shall be for a period of three years and thereafter the Committee shall re-assess the capacity and evaluate the performance of such organization to function as a certification agency. The Committee shall complete such re-evaluation and its decision within three months, during which the certification agency shall continue to function as a legitimate certification agency. (12) In case of any change in the status of an approved and appointed certification agency that may adversely affect its functioning as such an agency or in case of any violation of the standards of professionalism, transparency, integrity or objectivity coming to the knowledge of the Committee, the Committee may, after due inquiry and after providing proper opportunity of being heard to the agency, withdraw such approval and appointment at any time.” [C. No.4(2)IT-Jud/02-Pt-I] Salman Nabi Member (Direct Taxes)/ Additional Secretary