ISLAMABAD: In a bid to absorb and minimize the worst shocks to the revenue collection in result of placement of Pakistan on grey list of the Financial Action Task Force (FATF), the Federal Board of Revenue (FBR) is required to gear up efforts to get SRO 611(I)/2015 to be approved by the federal cabinet.
The SRO grants the Directorate General (Intelligence & Investigation) Inland Revenue powers of investigating agency.
Since the FATF has kept Pakistan on its grey list which means almost all the financial transactions from and to Pakistan will be monitored closely; resultantly, there will be lest business activities tantamount to reduced revenue collection by the Federal Board of Revenue. In the past, from 2012 to 2015, Pakistan was also placed on the FATF grey list.
The announcement comes a day after Pakistan submitted a comprehensive 26-point action plan to the FATF to choke the funding of militants groups, including Mumbai attack mastermind Hafiz Saeed-led JuD and its affiliates, to avoid being blacklisted by it. The placement on to grey list would hurt Pakistan’s economy as well as its international standing
A well-placed official source at FBR told Customs Today that SRO 611 was the sole tool in the hands of the government to come up to its commitment on the 26-point action plan submitted to the FATF, because it renders investigating powers to the Directorate General (Intelligence & Investigation) Inland Revenue.
The source said that Director General Intelligence & Investigation Inland Revenue sensitized the caretaker Finance Minister Dr Shamshad Akhtar about the sensitivity of the issue before her departure for the Paris meeting of the FATF and she promised to look into the issue.
But, now the court has declared the SRO as null and void, the government is required either to grant it cabinet approval or issue a new SRO for the proper implementation of anti-money laundering law as well as checking the terror financing; both the major source of concern of the international community and FATF.
The source said that in October 2017, the Lahore High Court (LHC) suspended the notices issued by the Directorate General Intelligence & Investigation Inland Revenue, Federal Board of Revenue (FBR), to frame cases against taxpayers under Anti-Money Laundering Act, 2010.
According to the order of the LHC, Directorate General Intelligence & Investigation was incompetent and without lawful authority since the Directorate General Intelligence & Investigation had not been constituted as required under section 230 of the Income Tax Ordinance, 2001 and also no notification in terms of section 24 of the Anti-Money Laundering Act, 2010 had been issued which was a sine qua non for authorizing the investigating officer to undertake any investigation.
The petitioner has further challenged the SRO 611(I)/2016 on the touchstone of a judgment of the Supreme Court of Pakistan reported as M/s Mustafa Impex, Karachi and others vs the government of Pakistan through federal secretary finance and others (2015 PTD 2269).
The source further said that in the beginning of the current month, the federal government restored the powers of Directorate General Intelligence & Investigation of Inland Revenue to initiate proceedings against the people who had possibly laundered tax-evaded money under the Anti-Money Laundering Act (AMLA) 2010.
The power was originally extended to the Directorate General Intelligence & Investigation (DG I&I) of Inland Revenue through a Statutory Regulatory Order 611 in September 2016, which was struck down by the single bench of Lahore High Court (LHC) in January on the plea that it was issued by a federal ministry without the express approval of the federal cabinet. It was alleged that SRO611 of 2016 has been issued without the due approval of the federal cabinet.