Tag: tax evasion

  • Largest money laundering scandal: FBR exposes Rs47 billion trade-based fraud 

    Largest money laundering scandal: FBR exposes Rs47 billion trade-based fraud 

    The Federal Board of Revenue (FBR) in Pakistan has uncovered a massive case of money laundering and under-invoicing in the trade industry, making it one of the country’s biggest financial scandals. 

    Following a thorough investigation by auditors, the FBR took legal action against two companies based in Peshawar. They found that these companies were involved in a staggering money laundering operation worth Rs47 billion, which they officially termed ‘trade-based money laundering.’ 

    According to the FBR’s report, these companies allegedly caused a massive financial loss of Rs25 billion to the national exchequer by under-invoicing transactions, all under the guise of dealing with solar panels. 

    In the FIR, the owners of these companies, Moon Light Traders and Bright Star, were named as suspects. The report revealed that Bright Star had been involved in under-invoicing since 2013, while auditors scrutinised records of 705 Goods Declarations (GDs) related to Moon Light Traders. 

    Furthermore, it was discovered that these companies continued their money laundering activities from 2017 to 2022. According to ARY News, the FBR promptly shared its report on trade-based money laundering and under-invoicing with the Caretaker Prime Minister, Anwaarul Haq Kakar. 

    In a separate incident in September, the FBR exposed a massive tax fraud worth Rs314 billion perpetrated by a fictitious company called K H & Sons. This fraud was uncovered by the Director-General of Internal Audit at Inland Revenue’s team. 

    Interestingly, K H & Sons was a paper company registered under the name of a Benami individual, Muhammad Kashif. Their fabricated documents falsely claimed to be in the iron and steel business, using addresses of legitimate markets like Liaquat Market, Agri Market, and M.A. Jinnah Market. 

    Sources also revealed that this bogus company was used for various illegal activities. What’s surprising is that despite the large-scale tax fraud, the FBR had not taken legal action against the culprits, leading to concerns that they might flee the country if a First Information Report (FIR) was not filed promptly. 

  • Karachi airport operation: Four passengers nabbed in million-rupee Apple product smuggling

    Karachi airport operation: Four passengers nabbed in million-rupee Apple product smuggling

    In a highly successful operation, customs authorities thwarted an attempt to smuggle high-value tech gadgets worth millions of rupees at Jinnah International Airport in Karachi

    According to ARY News, four passengers, who had arrived in Karachi from Dubai via a private airline, were apprehended by diligent customs officials, resulting in the confiscation of goods with a substantial valuation.

    The individuals taken into custody were identified as Azhar Iqbal, Muhammad Faisal, Azhar Gill, and Zul Noorain. 

    These passengers made an ill-fated attempt to evade customs scrutiny by utilising the green channel without declaring the valuable merchandise. However, the astute customs officials promptly intercepted them and proceeded to inspect their luggage.

    According to Superintendent Agha Najamuddin, who was in charge of the shift, a significant cache of contraband was seized from the arrested individuals. 

    This included more than 50 iPads, numerous laptops, 46 of the latest iPhone models, and 500 packs of internationally sourced cigarettes. 

    Furthermore, the customs officials initiated legal proceedings against the detained suspects, as they failed to provide adequate tax documentation to the customs staff, ensuring that justice prevails in this case.

  • FBR freezes PIA’s bank accounts for not paying Rs2.8 billion in taxes

    FBR freezes PIA’s bank accounts for not paying Rs2.8 billion in taxes

    Pakistan International Airlines (PIA), the national flag carrier, has found itself embroiled in a tax dispute as the Federal Board of Revenue (FBR) took the drastic step of freezing the airline’s bank accounts. This move comes at a critical time when the government has shifted the burden of revenue generation onto the general public, leading to growing concerns about the fairness of the taxation system.

    According to the FBR, PIA owes approximately Rs2.8 billion in taxes. However, the airline disputes this figure, claiming that the amount owed stands around Rs1.3 billion. A PIA spokesperson confirmed the ongoing communication between the airline’s management and the FBR, expressing hope that the bank accounts would be unblocked in the near future.

    Despite the harsh measure taken by the FBR, the PIA spokesperson reassured the public that the airline’s flight operations and other activities were continuing to function smoothly.

    The situation with PIA not paying taxes raises questions about the government’s tax collection policies. A recent report from the Finance Division revealed that government expenditure was on the rise in FY23, largely due to increased revenue collection through non-tax measures and indirect taxes. This indicates a failure to effectively broaden the tax base and implement direct taxation for various sectors.

    Critics argue that the government’s approach seems to focus on imposing indirect taxes on the masses, while offering some protection to the wealthier classes, even amid the current financial crunch. The freezing of PIA’s bank accounts further reinforces this perception, leaving the public questioning the fairness of the taxation system.

    Meanwhile, the report also highlighted that the government’s interest rate hikes policy is facing opposition, particularly from the business community. The State Bank of Pakistan has been unwilling to reverse the rate hikes, despite continuous protests and grave consequences faced by the public.

    As the PIA tax dispute continues, the government is under pressure to address the broader issues surrounding taxation and revenue generation to create a more equitable and sustainable financial framework.

  • FBR serves Rs13 million notice to popular Pakistani Youtube prankster

    The Federal Board of Revenue (FBR) has sent a Rs13 million tax notice to Pakistani YouTuber Nadir Ali, who runs a channel called “P4 Pakao”, a private media outlet has reported.

    Nadir’s videos show him and his team pulling pranks on unsuspecting people and attract a lot of internet traffic. The combined views of his channel are over 820 million, making his channel one of the largest in the country.

    According to reports, tax authorities suspected him of concealing his income and subsequently launched an investigation against him, and their suspicions were confirmed when they contacted YouTube to learn about his actual income.

    Reportedly, Nadir received more than Rs10 million in foreign exchange during the year on which exemption was claimed without furnishing proof to the tax department and at the same time, he maintained a bank account, which he did not declare in the wealth statement.

    The report also quoted tax officials as saying that the YouTuber was served a number of notices during the course of the investigation but he did not respond to any of them and now he has the option to appeal the order before a commission in Karachi.

    Nadir also spoke to the media outlet through his lawyer and denied having not responded to the FBR. “We received their notice and responded in person. We later applied for an extension in the time to file a response and our application was approved. We are now working to resolve this through all proper ­channels,” he added.

  • FBR serves ARY tax evasion notice, demands Rs992 million

    The Federal Board of Revenue (FBR) has served a notice to ARY News, demanding Rs992 million which the channel owes to the tax body, The News has reported.

    The entity has evaded millions of rupees in taxes through misrepresentation, concealment and misuse of exemptions, causing a substantial loss to the national exchequer, reports quoted FBR as saying.

    The body also claimed that in a bid to escape the fresh tax demand, the media house allegedly tampered with previously-submitted official agreement documents — which was discovered by the authorities.

    The investigation from FBR states that “an offshore related party (co-owned) entity ARY FZLLC undertook transactions with the other two companies, ARY COMM and ARY Films and TV Productions Pvt, which by, virtue of section 85 of the Income Tax Ordinance, 2001, were its associates”.

    The investigation further revealed that the tripartite agreement was used to allow the three companies to settle their receivables and payables in Pakistan on behalf of ARY FZLLC.

    The media group’s tax assessment showed that it obtained exemptions by claiming to export locally-produced content to the offshore entity in order to evade local taxes.

    However, ARY Communications has accused the FBR of conducting a fishing expedition and also added that the proceedings were “based on whims, assumptions, and guesswork”.

    Reports further revealed that FBR served the tax notice to the channel despite facing a lot of pressure from influential quarters to withdraw any such demand.