FBR retracts money laundering claim against 2,785 people

Chairman says taxmen prematurely bluffed to show good performance before media

ISLAMABAD: The Federal Board of Revenue (FBR) has backed off from its earlier claim that 2,785 wealthy individuals laundered Rs102 billion by declaring the amount as gifts, saying the taxmen prematurely bluffed to show good performance before the media.

Without completing investigations, it was premature on the part of FBR officers to claim that 2,785 people who declared Rs102 billion as gifts in 2016 laundered the money and would be tried under the Anti-Money Laundering Act, said FBR Chairman Tariq Pasha.

He gave the testimony before the Senate Standing Committee on Finance and Revenue.

The civil servants are increasingly becoming captivated by media fame and exaggerate their performance, said the FBR chairman.



He said that the reality was that when it came to work, there was hardly any progress. Pasha said that the same had happened in the case of reporting specious transactions when the FBR had claimed to unearth 256 cases but actually there were only three such cases.

The standing committee had sought a follow-up action report from the FBR on the issue of Rs102 billion gifts that according to the FBR’s earlier statement 2,785 individuals declared to evade taxes.



“Until proceedings are completed and proven otherwise, these are normal income tax cases,” said Pasha.

Calling it money laundering without obtaining concrete evidence is harassment of the taxpayers, said Senator Kamil Ali Agha of the PML-N.

He said that those who are labelled as money launderers cannot do business anywhere in the world.

Standing Committee Chairman Senator Saleem Mandviwalla said that many businessmen were worried about money laundering charges. He apprehended that the FBR was misusing the Anti-Money Laundering Act.

According to data compiled by the Directorate General of Intelligence & Investigation of Inland Revenue, 2,785 rich individuals declared receipt of gifts worth Rs102 billion and they committed money laundering through gift arrangements.

The Directorate General further observed that due to the absence of gift tax in Pakistan, a large number of taxpayers were laundering their tax evaded money through gifts received from their parents, siblings and spouses who are either out of the tax net or have no known sources of income, according to a brief that the FBR provided to the standing committee.

The brief further stated that three individuals declared gifts worth Rs1 billion and above, eight individuals declared gifts worth between Rs500 million and Rs1 billion, 49 individuals declared gifts worth between Rs500 million and Rs200 million, 97 people declared gifts worth between Rs200 million and Rs100 million, 280 individuals declared gifts worth between Rs100 million and Rs50 million and 2,348 people declared gifts worth between Rs50 million and Rs10 million.

FBR’s Member Inland Revenue Operations Khawaja Tanveer Ahmad informed the standing committee that the FBR had sent notices to these people to explain the source of gifts under Section 176 of the Income Tax Ordinance.

He explained that no notice has been sent under the Anti-Money Laundering Act. Tanveer was the DG Intelligence & Investigation unit when the FBR made this claim.



Out of 2,785 cases, 966 pertain to Karachi, 1,062 to Lahore, 388 to Islamabad, 144 to Faisalabad, 72 to Peshawar, 120 to Multan and 33 to Hyderabad, according to the FBR’s brief.

The FBR has sought details of donors of the gifts, copies of the gift deeds, mode of grant of gifts and back transaction details.

Under the law, anybody can give a gift through cross cheque or banking transaction, but it has to be declared in the donor’s Wealth Statement and recipient’s income tax return. If the recipient does not declare the gift, this will be treated as concealed income.

Published in The Express Tribune, August 24^th, 2017.

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