It is shocking that only two political parties filed income tax returns for tax year 2020 out of 27 registered with FBR and 127 with Election Commission of Pakistan despite section 114(1)(ac) of the Income Tax Ordinance, 2001 makes it mandatory. How can we expect rule of law in Pakistan, when 125 political parties are committing flagrant violation of Article 5(2) of the Constitution? They keep on bashing FBR but fail to fulfill the command that “Obedience to the Constitution and law is the inviolable obligation of every citizen wherever he may be and of every other person for the time being within Pakistan”—FBR: FATF challenges, Daily Times, March 14, 2021. The decision of keeping Pakistan till June 2022 in grey list, announced by President of Financial Action Task Force (FATF), Dr Marcus Pleyer, on June 25, 2021, has created much hype in media, without understanding its real basis and ramifications. The above quote, ignored by all political parties, media as well as civil society, precisely highlights our dilemma. The most recent article, co-authored with Huzaima Bukhari & Abdul Rauf Shakoori, was published two days before the decision, showing the standing and scoring of Pakistan in meeting all the requirement imposed by FATF and evaluation by Asia Pacific Group (AGP)— Pakistan: Crucial FATF hearing, Daily Times, June 23, 2021. No other newspaper in Pakistan did any such assessment and presented the in-depth analyses for all aspects of the challenges faced by Pakistan vis-à-vis FACTA and AGP. While, Pakistan was praised by FATF of achieving extraordinary progress on 26 actions, it pointed out that the basic reason to remain in grey list, is lax implementation of the last one by not punishing those mentioned in the resolutions of United Nations as terrorist networks, freezing their assets and unearth their financiers to be dealt under the law. These outlawed groups and organisations have been protecting their assets and financiers by changing names and doing “charity work” under various names and diverting funds from these charities for terrorist activities. The political parties, including those using religion to beg votes, get billions of rupees from their supporters and sympathisers, at home and abroad, but do not file tax returns. It is now proposed in the Finance Bill, 2021 that political parties will not only be exempt from income but will not be required to file tax returns. If this Bill is approved, it will create more troubles for us. The Senate Standing Committee on Finance & Revenue during the hearing asked the Government to withdraw it but in their final recommendations this is missing conspicuously! All entities working as non-profit organisations (NPOs), defined in section 2(36) of the Income Tax Ordinance, 2001 [“the Ordinance], are legally obliged to file statements of tax deductions as withholding agents and file their annual tax returns under section 114(1)(ac) of the Ordinance. The political parties being NPOs have neither obtained licence from Pakistan Centre of Philanthropy that is requirement under the Ordinance to avail take tax credit of 100% with many conditions, nor did they file returns for the Tax Year 2020, except two out of 127 political parties registered with Election Commission of Pakistan—see details in FBR: FATF challenges, Daily Times, March 14, 2021. The Federal Board of Revenue (FBR) has failed to force political parties and other NPOs and welfare organisations, including deeni madrassas (religious schools) to file statements and tax returns disclosing the names of persons, natural and legal, giving donations, subscriptions, or funds. Who are the financiers of these non-compliant NPOs that include political parties? The disclosure of the source of funds is constitutional requirement and knowing the same is a fundamental right of every citizen under Articles 17(3) and 19A of the Constitution of Islamic republic of Pakistan [“the Constitution”] that read as under: Right to information [Article 19A] “Every citizen shall have the right to have access to information in all matters of public importance subject to regulation and reasonable restrictions imposed by law” Freedom of association [Article 17] (3) Every political party shall account for the source of its funds in accordance with law. The Supreme Court of Pakistan in Watan Party & Others v Federation of Pakistan & Other PLD 2012 Supreme Court 292, held: “Article 19A has thus, enabled every citizen to become independent of power centres which, heretofore, have been in the control of information on matters of public importance….. Article 19A is a grant of the Constitution and, therefore, cannot be altered or abridged by a law enacted by Parliament…It, therefore, not for this Court to deny to the citizens their guaranteed fundamental right under Article 19A by limiting or trivializing the scope of such right through an elitist construction whereby information remains the preserve of those who exercise state power.” In India, there is more corruption than us and their banks are engaged in mega money laundering as exposed by International Consortium of Investigative Journalists (ICIJ) and BuzzFeed News through FinCen Files. However, the political parties in India and elsewhere, where law so requires as in Pakistan, are bound to file tax returns and disclose the sources of funds or their exemption stands withdrawn. Economically subjugated country like us cannot get the waivers that the mighty ones are enjoying and if we want to get the same, we must become an economic power like China that regained independence in 1949, two years after us. If our politicians want the country to come out of grey list and maintained it, first of all, on June 28, 2021, or early or later, while passing the Finance Bill 2021, all members of National Assembly (MNAs), above party affiliations, should ask for restoring the existing position that political parties and NPOs must get their accounts audited by notified auditors by ECP, for which amendments should be made in the Elections Act, 2017 and the Election Rules 2017. Filing of tax returns and making public source of funds should also be made mandatory. The new Finance Minister, Shaukat Tarin, first of all through a third independent party should get all the tax affairs of political parties and legislators scrutinised and made these public, especially the names of donors, contributions by party members and funds received from any other source, before arresting any citizen as tax cheat. The tax accountability must start from political parties, Senators, MNAs and members of Provincial Assemblies (MPAs). This is the real test of Shaukat Tarin and of our rulers to convince the FATG/AGP and the world at large that we are now ready to crack down on all banned and outlawed entities and all others engaged in money laundering or terrorist financing, freezing their assets, unearthing their financiers and punishing them after fulfilling the conditions of their fundamental right guaranteed under Article 10A of the Constitution and sharing information and rendering assistance under mutual legal assistance regime with all countries on reciprocal basis. This is in our own best interest and should not be taken negatively as agenda of some countries imposed through FATF/APG, International Monetary Fund and other lenders and donors. The issue of lobbies working against us should be taken up on diplomatic level and for that help of golden ring countries should be secured to become an economic power, rather than looking towards the United States and the West. ________________________________________________________________ Dr. Ikramul Haq, Advocate Supreme Court, specialises in constitutional, corporate, media, IT, intellectual property and international tax laws. He established Huzaima & Ikram in 1996 and is presently its chief partner as well as partner in Huzaima Ikram & Ijaz. He studied journalism, English literature and law. He is Chief Editor of Taxation. He is Visiting Faculty at Lahore University of Management Sciences (LUMS) and member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE). He has coauthored with Huzaima Bukhari many books that include Tax Reforms in Pakistan: Historic & Critical Review, Towards Flat, Low-rate, Broad and Predictable Taxes (revised & Expanded Edition, Pakistan: Enigma of Taxation, Towards Flat, Low-rate, Broad and Predictable Taxes (revised/enlarged edition of December 2020), Law & Practice of Income Tax, Law , Practice of Sales Tax, Law and Practice of Corporate Law, Law & Practice of Federal Excise, Law & Practice of Sales Tax on Services, Federal Tax Laws of Pakistan, Provincial Tax Laws, Practical Handbook of Income Tax, Tax Laws of Pakistan, Principles of Income Tax with Glossary and Master Tax Guide, Income Tax Digest 1886-2011 (with judicial analysis). The recent publication, coauthored with Abdul Rauf Shakoori and Huzaima Bukhari is Pakistan Tackling FATF: Challenges & Solutions available at: https://www.amazon.com/dp/B08RXH8W46 He is author of Commentary on Avoidance of Double Taxation Agreements signed by Pakistan, Pakistan: From Hash to Heroin, its sequel Pakistan: Drug-trap to Debt-trap and Practical Handbook of Income Tax. He regularly writes columns for many Pakistani newspapers and international journals and has contributed over 2500 articles on a variety of issues of public interest, printed in various journals, magazines and newspapers at home and abroad.