FATF & Collective Failure – Day by day Occasions

It is shocking that out of 27 parties registered with the FBR, only two political parties filed income tax returns for the 2020 tax year and 127 with the Electoral Commission of Pakistan despite Section 114 (1) (ac) of the Income Tax Ordinance, 2001 makes it mandatory. How can we expect the rule of law in Pakistan when 125 political parties are committing blatant violations of Article 5 (2) of the Constitution? They continue to beat FBR but fail to comply with the principle that “obedience to the Constitution and the law is the inviolable obligation of every citizen, wherever he may be, and of every other person in Pakistan for the time being” –FBR: FATF challenges, Daily times, March 14, 2021.

The decision to graylist Pakistan until June 2022 by the President of the Financial Action Task Force (FATF) Dr. Marcus Pleyer, announced on June 25, 2021, created a hype in the media without understanding its basis or implications. The above quote, which has been ignored by all political parties, precisely closes our dilemma. The most recent, co-authored with Huzaima Bukhari & Abdul Rauf Shakoori, was released two days before the decision and shows Pakistan’s reputation and score in meeting all of the FATF’s requirements and being assessed by the Asia Pacific Group (AGP). Pakistan: FATF crucial hearing, Daily times, 23.06.2021.

Praised by the FATF for its extraordinary progress, Pakistan noted that the reasons for staying on the gray list were not to punish those identified as terrorist networks in United Nations resolutions, and you Freeze Assets. They protect the same by changing names and doing so-called charity work (sic) under different names. Even many political parties, especially those using religious voters, receive billions of rupees from their supporters and sympathizers at home and abroad, but like political parties, they do not file tax returns. In the Finance Act 2021, it is now proposed that political parties not only be exempted, but also not be required to submit tax returns. If this bill is approved, it will cause us more problems. The Senate Standing Committee asked the government during the hearing to withdraw him, but in its own right final recommendations that is noticeably missing!

All companies operating as non-profit organizations (NPOs) within the meaning of Section 2 (36) of the EStV 2001 are legally obliged to submit tax withholding declarations as entitled to withhold and to submit their annual tax declarations. Political parties that are NPOs have not received a license from the Center of Philosophy to qualify for tax exemptions, nor have they filed two of 127 income tax returns for the 2020 tax year. The Federal Tax Authority (FBR) has failed to force this. You can submit declarations and tax returns disclosing the names of natural and legal persons who donate donations or funds. Who are the funders of these non-compliant NPOs, which also include political parties? The disclosure of these is constitutionally required and knowledge of them is a fundamental right of every citizen. Articles 17 (3) and 19A of the Constitution of the Islamic Republic of Pakistan, which read as follows:

Right to information [Article 19A]

“Every citizen has the right of access to information on all matters of public concern, subject to statutory provisions and reasonable restrictions”

Freedom of association [Article 17]

(3) Every political party must give an account of the origin of its funds in accordance with the law.

The Supreme Court of Pakistan in Watan Party & Others v Federation of Pakistan & Other PLD 2012 Supreme Court 292 ruled:

“Article 19A has thus made it possible for every citizen to become independent from centers of power that were previously under the control of information on matters of public concern… .. Article 19A is an empowerment of the constitution and can therefore not be changed or abbreviated by a dated Parliament enacted law … It is therefore not for this Court to deny citizens their guaranteed fundamental right under Article 19A by limiting or downplaying the scope of this right by an elitist construction whereby information is reserved for those who exercise state power. “

India has more corrupt than us and their banks are involved in mega money laundering as claimed and by the International Consortium of Investigative Journalists (ICIJ) BuzzFeed news by FinCen files. However, political parties in India and elsewhere where required by law are required to file tax returns and disclose the sources of funds or their exemption will be withdrawn.

An economically subjugated country like Pakistan cannot get the exemptions enjoyed by the powerful. If our politicians want the country to be removed from the gray list, initially on June 28, 2021 when the Finance Act 2021 is passed, all members of the National Assembly (MNAs) should restore the existing position that political parties and NPOs have to check their accounts and submit their tax returns. The new finance minister Shaukat Tarin then has a third party check them all before arresting a citizen as a tax evader. Tax accountability must come from political parties and senators, MNAs and members of the provincial assemblies. This is his test and our test to convince the world that we are now ready to take action against all banned and outlawed companies, freeze their accounts and exchange information as part of mutual legal assistance. This is in our own best interest. The subject of the lobbies working against us should be taken up at the diplomatic level and help from help Countries with a gold ring should be secured rather than facing the United States and the West.


DR. Ikramul Haq, Advocate Supreme Court, specializes in constitutional, corporate, media, IT, intellectual property and international tax law. He founded Huzaima & Ikram in 1996 and is currently its main shareholder and partner in Huzaima Ikram & Ijaz. He studied journalism, English literature and law. He is editor-in-chief of taxation. He is visiting professor at Lahore University of Management Sciences (LUMS) and a member Advisory Board and Guest Senior Fellow of the Pakistan Institute for Development Economics (ASK).

He has authored many books with Huzaima Bukhari, including Tax Reforms in Pakistan: Historical and Critical Review, Towards the apartment, Low, broad and predictable taxes (revised & expanded edition, Pakistan: Enigma of Taxation, Towards Flat, Low Rate, Broad and Predictable Taxes (revised / expanded edition) December 2020), Law & Practice of Income Tax, Law , Practice of sales tax, Law and Practice of Company Law, Law and practice of federal consumption tax, Law and Practice of Sales Tax on Services, Federal Tax Laws of Pakistan, State tax laws, Practical Guide to Income Tax, Tax Laws of Pakistan, Income tax basics with glossary and Master Tax Guide, Income Tax Digest 1886-2011 (with legal analysis).

The most recent publication co-authored with Abdul Rauf Shakoori and Huzaima Bukhari is Pakistan fighting the FATF: challenges and solutions

available at: https://www.amazon.com/dp/B08RXH8W46

He is the author of Comment on double taxation treaties signed by Pakistan, Pakistan: From Hash to Heroin, its continuation Pakistan: From Drug Trap to Debt Trap and Practical Guide to Income Tax. He is a regular columnist for many Pakistani newspapers and international magazines, and has authored over 2500 articles on a variety of topics of public interest, which are published in various journals, magazines and newspapers both domestically and abroad.