FATF sets the alarm bells ringing against Pakistan
ISLAMABAD - Financial Action Task Force (FATF) sets the alarm bells ringing about adverse effects of Pakistan’s tax amnesty scheme on the global fight against terror financing and money laundering.
Pakistan will have to move swiftly from here to save the tax amnesty package that can help to broaden its extremely narrow tax base, currently comprising only 1.261 million income tax return filers.
The FATF has written a letter to Pakistan and raised concerns about the tax amnesty scheme, said sources in the Finance Ministry. They said there was some lapse on part of Pakistan, as it did not seek prior approval of the FATF of the amnesty package, Tribune has reported.
The scheme also faces opposition from within the government, as the Federal Board of Revenue (FBR) has distanced itself from some components of the tax amnesty scheme, said the sources in the FBR.
The tax authorities have problems with giving amnesty on local assets and changes in tax structure for the realty sector, individuals and Association of Persons (AOPs). The PM did not invite the FBR top brass in the press conference in which the scheme was announced.
Adviser to PM on Finance Dr Miftah Ismail confirmed to The Express Tribune that the FATF has raised some issues with regard to the amnesty.
“There is nothing to worry about, as the legal team has assured me that the proposed package is in compliance with the global standards on anti-money laundering,” said Dr Ismail.
He said the prime minister has already announced that there will not be immunity from prosecution under the Anti-Money Laundering Act 2010 to those who would avail the scheme. Pakistan is required to submit an action plan to the FATF in May in order to be removed from the list in the coming month.
Once the FATF approves this action plan in June, there will be a formal announcement from the FATF about placing Pakistan on the greylist. If Pakistan fails to submit a plan, the FATF has the option of placing the country on its blacklist, which carries even more adverse implications.