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TAX NEWS APRIL 07, 2016



1.      Choking terror financing: FBR to play lead role in execution of NRA plan.

April 07, 2016

The Federal Board of Revenue (FBR) will play the lead role in the execution of National Risk Assessment (NRA) plan for choking financing for terrorists and terrorist organisation with the help of Financial Monitoring Unit (FMU) Karachi and other government organisations. Sources said that the decision has been taken in the last 11th General Committee (GC) meeting held at Finance Division on anti-money laundering and Financial Action Task Force. 

Dr Waqar Masood Khan, Finance Secretary/Chairman GC highlighted Pakistan's achievements in AML/CFT regime. He told that Pakistan was successfully de-listed from Financial Action Task Force (FATF) monitoring process, ie, grey list in 2015 after compliance with the recommendations of the action plan. It was very important as staying in the grey list could have adversely affected the working and businesses of banking and financial sectors. Finance Secretary added that challenges still exist and a lot of work has to be done in respect of implementation of UNSC Resolutions relating to proscribed entities. He also informed of the work done by sub-committee on Choking Financing for Terrorists and Terrorist Organisation since its creation under National Action Plan. The meeting discussed the progress on National Risk Assessment (NRA) as per FATF's Rec. Notes. The Deputy Secretary Anti-Money Laundering (AML) being member of one of the Working Groups of NRA updated the participants on the ongoing NRA exercise. He added that the exercise was initiated in May 2015 with the collaboration of World Bank, and that Director General (DG) FMU was appointed as NRA Co-ordinator and Working Groups (WG) were constituted to accomplish the task. The donor agency arranged workshops for WG members and provided templates with guidance containing 9 modules on NRA. Draft reports from National Threat and TF Risk Assessment Group, Securities & Insurance, Financial Inclusion and Other Financial Institutions have so far been received by NRA Coordinator while work by remaining groups is underway. The participants were told that on Designated Non Financial Business and Professions (DNFBPs) group, having no regulatory body or framework, no progress could be made, hence, FMU proposed hiring services of consultant from National Crime Agency (NCA) of UK which had indicated to assist Pakistan by providing technical resources as well as funds needed for such an engagement. . However, it was agreed to assign the lead role to FBR in the NRA work relating to DNFBPs. In case of need, a local consultant would be engaged. D.G (FMU) was advised to move this proposal for completing the work relating to DNFBP module. 

The meeting decided that the DG (FMU) being NRA Co-ordinator will refer the NRA work relating to DNFBPs to FBR through Finance Division for hiring of local consultant for assisting in accomplishing the work in deficient areas especially DNFBP module. 

 

 

 

2.      KCCI suggests taxing agriculture sector equally

April 07, 2016

The Karachi Chamber of Commerce and Industry (KCCI) has suggested that the agriculture sector should also be equally taxed like other sectors of the economy in order to strengthen revenue collection. "Such an unnecessary exemption to high agriculture incomes creates a distinct disequilibrium and a sense of injustice, besides providing a safe haven for whitening money," the chamber said. 

It said that the imposition of an agricultural income tax on large and medium farmers would significantly increase revenue collection, besides it would also help reduce poverty in the country. The chamber said that agriculture related activities contributed around 21 percent to GDP, while revenue collection from agricultural income tax was less than one percent of the total collections. 

"Leaving huge agricultural wealth untaxed while taxing salaried individuals, entrepreneurs and businessmen is akin to breeding inequality and injustice at the whims of a few influential individuals and entities," the chamber observed. It said that to create a level playing field, every source of income must be indiscriminately taxed, whether it be from agriculture or non-agriculture, as exempting agriculture from taxation burdened the rest of the economy and caused significant revenue loss for the government. The chamber was of the view that enhanced agriculture taxation would make the provinces more self-sufficient and reduce the burden on the federal government. The chamber asked the provincial governments to realise the gravity of the matter and strengthen the existing agriculture taxation laws and also ensure their implementation in letter and spirit. 
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