Referral of tax evasion cases to NAB opposed
Senate panel objects to declaring trade-based illegal transfer of funds overseas as money laundering
KPRA meets sales tax target. PHOTO: CREATIVE COMMONS
ISLAMABAD:
A senate panel on Monday opposed the government’s proposal to handover the federal cabinet’s powers to appoint special judges to Prime Minister and refer tax evasion cases of both taxpayers and taxmen to the National Accountability Bureau (NAB).
Headed by PPP’s Senator Farooq H Naeek, the Senate Standing Committee on Finance also objected to the government’s proposal to declare trade-based illegal transfer of funds overseas as money laundering, which may throw a person behind bars for 10 years.
Declaring trade-based illegal transfer of funds as money laundering is one of the conditions of Financial Action Task Force (FATF). The FATF’s week-long plenary meetings began on Tuesday in the United States, in which it will review progress on the implementation of 27-point Action Plan by Pakistan. The FATF meetings’ outcome will be announced on Friday, as Pakistan seeks help of three friendly countries to avoid being blacklisted.
During a clause-by-clause reading of the Finance Bill 2019 on the first day, the standing committee on Finance largely supported the government’s budgetary measures, except where it felt that the proposals were “draconian” or in cases where these were hurting the business interests of some industrialists.
Corporate tax evasion in Pakistan
The standing committee opposed the proposal of disclosing names of unregistered buyers of industrial goods.
The government on Monday refused to withdraw a proposal that has declared trade-based illegal transfer of funds abroad as money laundering, which will attract up to 10 years of imprisonment. The standing committee wanted this budget proposal to be withdrawn.
The transfer of funds abroad by understating the value of exports and overstating the value of imports is also money laundering and is on the radar of the FATF, said the Federal Board of Revenue (FBR) Chairman Shabbar Zaidi. He said the FBR cannot withdraw this amendment, but was ready to introduce checks and balances to stop its misuse by taxmen.
If a person commits trade-based money laundering, he shall be liable to a penalty of confiscation of goods and upon conviction by a special judge he shall further be liable to imprisonment for up to 10 years, one-million fine and forfeiture of property in accordance with the Anti-Money Laundering Act of 2010, according to the budget proposal.
PTI’s Senator Mohsin Aziz said the FBR may misuse money laundering powers, which can affect genuine business transactions.
Proceeds against persons
The standing committee also opposed the government’s proposal of sending cases of taxpayers and taxmen to investigation agencies including the National Accountability Bureau (NAB) that cause losses to the exchequer due their corrupt practices.
FBR registers FIR against Shaheen Air for alleged tax evasion
“It is a draconian law that throws taxpayers and taxmen at the mercy of the NAB,” said Naek. He proposed that instead of involving other investigation agencies, the FBR should punish its officers.
The FBR has proposed these amendments on the instructions of Prime Minister Imran Khan, who wants corrupt taxpayers and taxmen behind the bars.
Cabinet powers
The government has proposed many changes in the tax laws that nullify the Supreme Court of Pakistan’s judgment, which defined the federal government. The government’s amendments concentrate powers in the hands of the prime minister by taking it away from the federal cabinet.
The government has proposed that the prime minister can appoint special judges in consultation with the chief justice of the high courts to administer justice in customs duties-related cases.
“Do not destroy the institutions and these powers must remain with the federal cabinet,” said Naeek - who is also an eminent lawyer of Supreme Court of Pakistan. Article 175 of the Constitution ensures independence of the judiciary that cannot be taken away, said Naeek. Member Customs Policy Javed Ghani said the Ministry of Law proposed these amendments in the light of a federal cabinet decision.
The standing committee rejected a documentation measure that binds the industrialists to disclose the National Identity Card (NIC) number of an unregistered buyer of its goods. The FBR has proposed to make submission of NIC number mandatory, if an industrialist wants to claim input tax refunds.
PTI’s Senator Mohsin Aziz was against the government’s proposal that is primarily aimed at bringing the unregistered persons in the tax net.
The standing committee also rejected the government’s proposal to reintroduce the condition of yearly audit of the sales tax registered persons.
The yearly audit condition has been introduced on the condition of the International Monetary Fund (IMF) and the World Bank, said Dr Hamid Atiq Sarwar, member Inland Revenue Policy of the FBR. At present, a taxpayer can be audited only once in three years.
Published in The Express Tribune, June 18th, 2019.
A senate panel on Monday opposed the government’s proposal to handover the federal cabinet’s powers to appoint special judges to Prime Minister and refer tax evasion cases of both taxpayers and taxmen to the National Accountability Bureau (NAB).
Headed by PPP’s Senator Farooq H Naeek, the Senate Standing Committee on Finance also objected to the government’s proposal to declare trade-based illegal transfer of funds overseas as money laundering, which may throw a person behind bars for 10 years.
Declaring trade-based illegal transfer of funds as money laundering is one of the conditions of Financial Action Task Force (FATF). The FATF’s week-long plenary meetings began on Tuesday in the United States, in which it will review progress on the implementation of 27-point Action Plan by Pakistan. The FATF meetings’ outcome will be announced on Friday, as Pakistan seeks help of three friendly countries to avoid being blacklisted.
During a clause-by-clause reading of the Finance Bill 2019 on the first day, the standing committee on Finance largely supported the government’s budgetary measures, except where it felt that the proposals were “draconian” or in cases where these were hurting the business interests of some industrialists.
Corporate tax evasion in Pakistan
The standing committee opposed the proposal of disclosing names of unregistered buyers of industrial goods.
The government on Monday refused to withdraw a proposal that has declared trade-based illegal transfer of funds abroad as money laundering, which will attract up to 10 years of imprisonment. The standing committee wanted this budget proposal to be withdrawn.
The transfer of funds abroad by understating the value of exports and overstating the value of imports is also money laundering and is on the radar of the FATF, said the Federal Board of Revenue (FBR) Chairman Shabbar Zaidi. He said the FBR cannot withdraw this amendment, but was ready to introduce checks and balances to stop its misuse by taxmen.
If a person commits trade-based money laundering, he shall be liable to a penalty of confiscation of goods and upon conviction by a special judge he shall further be liable to imprisonment for up to 10 years, one-million fine and forfeiture of property in accordance with the Anti-Money Laundering Act of 2010, according to the budget proposal.
PTI’s Senator Mohsin Aziz said the FBR may misuse money laundering powers, which can affect genuine business transactions.
Proceeds against persons
The standing committee also opposed the government’s proposal of sending cases of taxpayers and taxmen to investigation agencies including the National Accountability Bureau (NAB) that cause losses to the exchequer due their corrupt practices.
FBR registers FIR against Shaheen Air for alleged tax evasion
“It is a draconian law that throws taxpayers and taxmen at the mercy of the NAB,” said Naek. He proposed that instead of involving other investigation agencies, the FBR should punish its officers.
The FBR has proposed these amendments on the instructions of Prime Minister Imran Khan, who wants corrupt taxpayers and taxmen behind the bars.
Cabinet powers
The government has proposed many changes in the tax laws that nullify the Supreme Court of Pakistan’s judgment, which defined the federal government. The government’s amendments concentrate powers in the hands of the prime minister by taking it away from the federal cabinet.
The government has proposed that the prime minister can appoint special judges in consultation with the chief justice of the high courts to administer justice in customs duties-related cases.
“Do not destroy the institutions and these powers must remain with the federal cabinet,” said Naeek - who is also an eminent lawyer of Supreme Court of Pakistan. Article 175 of the Constitution ensures independence of the judiciary that cannot be taken away, said Naeek. Member Customs Policy Javed Ghani said the Ministry of Law proposed these amendments in the light of a federal cabinet decision.
The standing committee rejected a documentation measure that binds the industrialists to disclose the National Identity Card (NIC) number of an unregistered buyer of its goods. The FBR has proposed to make submission of NIC number mandatory, if an industrialist wants to claim input tax refunds.
PTI’s Senator Mohsin Aziz was against the government’s proposal that is primarily aimed at bringing the unregistered persons in the tax net.
The standing committee also rejected the government’s proposal to reintroduce the condition of yearly audit of the sales tax registered persons.
The yearly audit condition has been introduced on the condition of the International Monetary Fund (IMF) and the World Bank, said Dr Hamid Atiq Sarwar, member Inland Revenue Policy of the FBR. At present, a taxpayer can be audited only once in three years.
Published in The Express Tribune, June 18th, 2019.