ISLAMABAD: The Federal Board of Revenue has pinpointed 26 serious tax crimes pertaining to all the three Inland Revenue laws – Sales Tax, Income Tax and Federal Excise Duty, to be declared as predicate offences under Anti-Money Laundering Act, 2010 and proposed comprehensive amendments to the AML Act.
As per details, State Bank of Pakistan’s Financial Monitoring Unit (FMU) with the aim to implementing Financial Action Task Force Recommendations (FATF), has approached the FBR to specify the tax crimes under all three Inland Revenue Laws i.e Sales Tax Act, 1990, Income Tax Ordinance, 2001 and Federal Excise Act, 2005, for inclusion as Predicate Offences under the Anti-money Laundering Act, 2010. The Finance Ministry, spearheading the initiative, has demanded the FBR to notify fiscal crimes under tax laws on war footings.
The FBR has compiled a list of fiscal offences proposed as predicate offences under the Anti-Money Laundering Act, 2010. Following are the fiscal offences identified under Sales Tax Act, 1990: Failure to furnish a return within the due date u/s 26; claiming of inadmissible input tax credit or refund u/s 10(3); failure to issue an invoice with required u/s 23; unauthorised issuance of an invoice in which an amount of tax is specified u/s 3, 7 and 23; failure to notify changes of material nature in the particulars of registration of a taxable activity u/s 14; failure to deposit the amount of tax due u/s 3, 6, 7 and 48; failure to apply for registration u/s 14; entering into a collusive arrangement resulting in non-levy or short of tax erroneous refund u/s 11(3); failure to maintain records u/s 23 and 24; price transfer of taxable supplies in transaction between associates as is over and above the fair market value of supplies in an arm’s length transaction u/s 25AA; failure to comply with provisions of section 25; denial or obstruct-ion of access to an authorised officer to business premises, registered office or to any other place where records are kept u/s 25, 38, 38A and 4GB and violation of any embargo placed on removal of goods in connection with recovery of tax u/s 48
Similarly offences proposed under the Income Tax Ordinance 2001 included non-filing of Income Return u/s 114; non-furnishing of Wealth Statement u/s 116; non-furnishing of Statements u/s 115, 165 and 165A; non-maintenance of Records u/s 174; failure to register as a taxpayer u/s 181; failure to issue cash memo, invoice or receipt as required u/s 174/Chapter VII of the Income Tax Rules, 2002; failure to deposit the amount of tax due u/s 137; failure to produce records or documents u/s 177; failure to furnish information u/s 176; furnishing of false or misleading returns, statements or information u/s 114, 115, 116, 174, 176, and 177; concealment of income or furnishing of inaccurate particulars of income or expense u/s 20 and 111; orchestrating non-arms length transactions between associates u/s 108 and re-characterisation of income u/s 109 giving rise to additional tax liability.
While, fiscal offences pinpointed under the Federal Excise Act, 2005 are: Offences as listed u/s 19 for the nomination for a relevant Investigating/Prosecuting Agency, the FBR has proposed Directorate General (I&I-Inland Revenue) to be notified as an “Investigating or Prosecuting Agency” in term of Section 2(j) of the Anti-money Laundering Act, 2010. The concomitant Amendments Proposed in AML Act, 2010 by the FBR are: Section 5 (1) of the AML Act, 2010 to be amended to include Chairman, FBR, in the National Executive Committee (NEC). The section 5(4) of the AML Act, 2010 be amended to include Member (IR) in the General Committee and section 41 of the AML Act, 2010, be deleted or suitably amended.