Section 199 of the Income Tax Ordinance, 2001, updated up to June 30, 2021, now explicitly outlines that knowingly and willfully aiding, abetment, assisting, inciting, or inducing another person to commit an offense under the ordinance is a punishable offense, carrying the risk of a fine or imprisonment for a term not exceeding three years, or both.
The Finance Act, 2021, introduced several amendments to the Income Tax Ordinance, 2001, with Section 199 standing out as a crucial provision in the fight against tax-related offenses. The revised text of Section 199 reads: “Prosecution for abetment. — Where a person knowingly and wilfully aids, abets, assists, incites or induces another person to commit an offence under this Ordinance, the first-mentioned person shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding three years, or both.”
This amendment addresses a critical aspect of tax enforcement by targeting individuals who actively assist or encourage others to engage in offenses under the Income Tax Ordinance, 2001. Abetment in tax matters, whether through aiding, abetting, assisting, inciting, or inducing, is now explicitly recognized as an offense that warrants severe consequences.
The penalties outlined in Section 199 include the imposition of fines or imprisonment, with the maximum term of imprisonment not exceeding three years. This stringent approach underscores the seriousness with which the FBR views individuals who contribute to or encourage violations of tax laws.
The incorporation of such provisions aligns with global efforts to combat tax evasion and promote tax compliance. Many countries have recognized the importance of holding not only the primary offenders but also those who facilitate or encourage tax-related offenses accountable for their actions.
This amendment is expected to act as a powerful deterrent against individuals who may have considered engaging in activities that run afoul of the Income Tax Ordinance, 2001. The risk of facing fines or imprisonment is likely to discourage individuals from actively participating in or promoting illicit practices related to taxation.
Industry experts have applauded this move, noting that it represents a proactive step in fortifying the legal framework surrounding tax enforcement. By explicitly penalizing abetment in tax matters, the FBR is sending a clear message that it will not tolerate any form of collaboration or encouragement of tax offenses.
The amendment to Section 199 of the Income Tax Ordinance, 2001, intensifying penalties for abetment in tax matters, demonstrates the commitment of the FBR to create a robust and deterrent-driven tax enforcement environment. This change is anticipated to contribute significantly to the prevention of tax-related offenses and the promotion of a culture of compliance among individuals and businesses in Pakistan.
