ISLAMABAD: The Federal Board of Revenue’s (FBR) Inland Revenue has extended the scope of investigation against tax evaders and money launderers in order to ensure compliance with the action plan of the Financial Action Task Force (FATF).
Sources said that the tax watchdog has detected tax evasion worth Rs244 billion along with money laundering to the tune of Rs62 billion. In the light of these detections, the tax watchdog has issued 1,608 red alert notices to the tax defaulters, whereas the 71 reports pertaining to money laundering were also submitted by the Intelligence Wing of the Inland Revenue.
The FBR Intelligence Wing has sent these investigation reports to its field formations for further action against money launderers and tax evaders.
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According to FBR, the people involved in tax evasion to the tune of Rs100 million (for filers) and Rs25 million (non-filers) will risk arrest after amendments to the Income Tax Ordinance 2001.
According to the FBR, the new amendments will help in arresting people that are hiding their taxable income. A third party will investigate and identify the tax defaulters and the arrest will be approved by a committee comprising the finance minister, the FBR chairperson, and senior member.
Once the notice has been issued on taxable income, there will be no further intimation from the FBR.
In the previous financial year, the FBR went over its tax collection target of Rs 4,691 billion and managed to collect Rs 4,725 billion. But the FBR didn’t manage to meet its initially envisaged tax collection target of Rs4,963 billion for 2020-21, which was revised downward to Rs4,691 billion in line with the International Monetary Fund (IMF) agreement.
FATF ACTION PLAN:
Last month, FATF gave Pakistan a six-point action plan pertaining to the Mutual Evaluation Report(MER) process.
“In response to additional deficiencies later identified, in Pakistan’s 2019 APG Mutual Evaluation Report (MER), Pakistan has made progress to address a number of the recommended actions in the MER and provided further high-level commitments in June 2021 to address these strategic deficiencies pursuant to a new action plan that primarily focuses on combating money laundering,” it added.
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“Pakistan should continue to work to address its strategically important AML/CFT deficiencies, namely by: (1) enhancing international cooperation by amending the MLA law; (2) demonstrating that assistance is being sought from foreign countries in implementing UNSCR 1373 designations; (3) demonstrating that supervisors are conducting both on-site and off-site supervision commensurate with specific risks associated with DNFBPs, including applying appropriate sanctions where necessary; (4) demonstrating that proportionate and dissuasive sanctions are applied consistently to all legal persons and legal arrangements for non-compliance with beneficial ownership requirements; (5) demonstrating an increase in ML investigations and prosecutions and that proceeds of crime continue to be restrained and confiscated in line with Pakistan’s risk profile, including working with foreign counterparts to trace, freeze, and confiscate assets; and (6) demonstrating that DNFBPs are being monitored for compliance with proliferation financing requirements and that sanctions are being imposed.”
Since its placement on the anti-terror list, over 900 properties of proscribed organisations have been taken over by the state machinery. Similarly, individuals of concern — Hafiz Saeed, Zakiur Rehman Lakhvi, Yahya Mujahid, Professor Zafar Iqbal, Hafiz Abdus Salam and others — have also been prosecuted by the government.
Pakistan has overhauled its laws pertaining to anti-money laundering and terror financing by introducing harsher punishments for those found involved in corrupt and illicit practices. Moreover, the country has also proposed strict monitoring of imports and exports to curb the illegal flow of wealth in its recent finance bill.
GOVT RESPONDS TO FATF DECISION:
In a press release, the Finance Ministry said: “The Plenary discussion on Pakistan focused on three main areas: Pakistan’s Technical Compliance, ICRG Action Plan and Post Observation Period Report (POPR).”
“On Technical Compliance, FATF appreciated Pakistan’s commitment and efforts in seeking upgrades in a number of recommendations and expected that Pakistan would continue same momentum.
“Regarding 2018 Action Plan, the FATF recognised considerable progress made by Pakistan on action plan and Pakistan’s high-level commitment. Pakistan has now completed 26 of the 27 Action Plan items. The FATF, after discussion, decided to retain status quo for Pakistan i.e. countries in increased monitoring for 2018 TF Action Plan, for remaining one action plan item. Pakistan is confident that the remaining action item would be completed before FATF’s next Plenary scheduled in October 2021.
“In relation to POPR, FATF acknowledged Pakistan’s significant progress and continuation of Pakistan’s high-level commitment. A total of 82 deficiencies were highlighted in Pakistan’s 2019 MER which were included in the POPR as 67 recommended actions in 11 IOs, on which Pakistan reported progress. As a result of the progress made since the MER 2019, the FATF approved a 7 points ML centric action plan to be implemented by Pakistan. Pakistan has already provided its political commitment to FATF for implementation of the new Action Plan.
“During FATF Plenary, there was a broader consensus on Pakistan’s continued efforts and progress on implementation of TF Action Plan as well as MER Recommended Actions. There was a complete consensus among the membership regarding Pakistan’s unprecedented achievements in FATF.
