FBR is looking into traders who are using bitcoin for their transactions. The law enforcement agency believes that some investors may be dealing in bitcoin in order to evade taxes and launder money.
Officially the State Bank of Pakistan does not recognize cryptocurrencies, including bitcoin. The digital currencies are traded as commodities instead.
Whitening Black Money?
The agency is of the view that given SBP’s express orders against the use of bitcoin, people may be use cryptocurrencies to evade tax and launder money. It believes that certain individuals buy bitcoin with their black money and park it outside of Pakistan in many cases, according to a senior tax offical at the board. An investigation was started by the anti-money laundering cell of the Directorate General of Intelligence and Investigation, Inland Revenue (I&I-IR) into people with large investments in cyrptocurrencies including bitcoin.
Tax evasion is a punishable offense under the Anti-Money Laundering Act 2010.
The tax official added that bitcoin trade is booming in Pakistan. Their inquiries revealed that people mostly trade hard cash for bitcoins in Pakistan.
After receiving credible information, the Directorate General I&I-IR initiated a search to trace the bitcoin trade.
Currently 1 bitcoin is valued at Rs. 277,866.
Bitcoin Trade Surging
The major traders were summoned for further investigation. According to an online report, bitcoin trade in Pakistan increased 400% in December last year.
As to the reason why bitcoin is so popular for money laundering, its because of its decentralized nature. There are no regulatory bodies or checks and balances on bitcoin trade. All trade is done peer-to-peer directly while staying completely anonymous.
The same tax official said that the major bitcoin traders in Pakistan were traced back to “a multinational telecommunication company” in Islamabad alledgedly. They also maintain bank accounts in other countries.
What alerted the authorities was the fact that they were not reporting their business activities to the tax authorities, which they suspected as money laundering. The official added that there is a high chance of tax evasion and money laundering in bitcoin trade.
Thus, to eliminate any suspicions an in-depth probe will be carried out to gauge the level of cryptocurrency trade in Pakistan and determine whether the income through the trading is being taxed or not.