ISLAMABAD – Financial Action Task Force (FATF) sets the alarm bells ringingabout adverse effects of Pakistan’s tax amnesty scheme on the global fightagainst terror financing and money laundering.
Pakistan will have to move swiftly from here to save the tax amnestypackage that can help to broaden its extremely narrow tax base, currentlycomprising only 1.261 million income tax return filers.
The FATF has written a letter to Pakistan and raised concerns about the taxamnesty scheme, said sources in the Finance Ministry. They said there wassome lapse on part of Pakistan, as it did not seek prior approval of theFATF of the amnesty package, Tribune has reported.
In February, the FATF plenary decided to place the country on the greylistfrom June. The FATF is the global standard setting body for anti-moneylaundering and combating the financing of terrorism.
The scheme also faces opposition from within the government, as the FederalBoard of Revenue (FBR) has distanced itself from some components of the taxamnesty scheme, said the sources in the FBR.
The tax authorities have problems with giving amnesty on local assets andchanges in tax structure for the realty sector, individuals and Associationof Persons (AOPs). The PM did not invite the FBR top brass in the pressconference in which the scheme was announced.
Adviser to PM on Finance Dr Miftah Ismail confirmed to The Express Tribunethat 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 theproposed package is in compliance with the global standards on anti-moneylaundering,” said Dr Ismail.
He said the prime minister has already announced that there will not beimmunity from prosecution under the Anti-Money Laundering Act 2010 to thosewho would avail the scheme. Pakistan is required to submit an action planto 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 formalannouncement from the FATF about placing Pakistan on the greylist. IfPakistan fails to submit a plan, the FATF has the option of placing thecountry on its blacklist, which carries even more adverse implications.