ISLAMABAD: The Standing Committee of the National Assembly on Finance and Revenue on Wednesday called for not treating tax evasion under the provisions of Anti-Money Laundering (AML) law under the premise of Financial Action Task Force (FATF) and sought a briefing on the terms of $4.2 billion Saudi balance-of-payment support package.

The meeting of the committee presided over by PTI MNA Faiz Ullah noted that business community was facing serious problems because of AML and its enforcement agencies which needed to be addressed on priority.

On a point raised by PPP’s Dr Nafisa Shah for details of the Saudi package, the Director-General Debt Office of the Ministry of Finance agreed to give an in-camera briefing to the standing committee because of sensitivities of the bilateral relationship.

Dr Shah said there were a lot of news reports on terms and conditions of the Saudi package that also included $1.2bn in oil facility under deferred payment mechanism. She wanted a briefing on the subject by the finance ministry and the State Bank of Pakistan.

Interestingly, the finance ministry has already disclosed that the $3bn deposit and oil facility from Saudi Arabia entailed interest rate of 4pc and 3.8pc respectively. The rates are higher than previous $6bn Saudi package in 2018 that was available at 3.2pc which could not be fully utilised and was partially withdrawn amid unease in bilateral relations.

The committee discussed problems faced by business community due to AML laws and its implementation by enforcement agencies. DG Investigation Customs FBR Abdul Rashid Shaikh explained that investigation and prosecutions were carried out for tax crimes based on preliminary data of suspicious transactions reports (STRs) of financial fraud and smuggling.

He reported that 170 investigations and 44 prosecutions had taken place between 2018 and 2021 but there was no conviction as yet. He, however, hoped solid evidence available in some cases would lead to convictions in the courts.

FBR chairman Ashfaque Ahmad believed that AML and subsequent investigations and prosecutions had created reasonable deterrence.

Mr Faiz Ullah said that business community’s concern was that FIRs were being registered before any assessment and tax evasion had been brought under the jurisdiction of AML law which was a very dangerous sign because the size of the undocumented economy was greater than formal economy. He said the tax evasion should be treated and proceeded under the tax law and not under AML laws.

The FBR chairman said the major focus of the tax authorities was on revenue collection but the AML law was passed by the parliamentarians which granted powers to the FBR due to requirements of the FATF.

Another FBR official told the committee that first conviction in tax crime was in Peshawar recently even though more than 100 petitions were still pending. It was reported that Inland Revenue had registered 215 FIRs against 267 persons and Rs235bn worth of assets had been attached with the permission of courts, involving Rs76bn revenue impact.

The committee also discussed Federal Government Properties Management Authority Bill 2021 in detail but deferred it for next meeting as members expressed reservations whether all stakeholders were taken on board before its approval from the cabinet.

Published in Dawn, December 2nd, 2021