Reports from Pakistan suggest that tax officials, far from cracking down on trade-based money laundering, are in reality indulging in practices such as under-invoicing and using fake invoices according to an official report.
The officials, who are also accused of failing to collect taxes, are now challenging the report’s findings.
“Tax officials often indulge in under-invoicing, over-invoicing, duty drawbacks in customs, and under-assessment of income or unlawful adjustment of input tax, fake invoices, [and] illegal issuance of income tax and sales tax refunds,” according to the report.
The report, which examined three tax districts in Karachi, also found that officials had failed to collect taxes, even though they had issued tax demands to 44 wealthy individuals.
The individuals appealed against the demands. They subsequently dropped their appeals but nevertheless failed to pay any tax.
Consequently, none of the equivalent of US$26.5 million in the demands had been collected according to the report.
An official told local media that the report is deficient in several respects and a new report has been commissioned.
Categories: Trade Based Financial crimes News