Federal Board of Revenue (FBR) inked down a treaty with Organization for Economic Cooperation and Development (OECD) on Saturday. The treaty will allow FBR to get hold of all the information of Pakistani nationals’ offshore account details for the past 15 years.
Primarily, it will expose all those people who dodge tax authorities. Moreover, the treaty will also uncover tax defaulters as well as those who are involved in corruption and money laundering activities.
A senior official on the condition of anonymity stated:
“The signatories of OECD convention on tax matters are obliged to provide last 15 years data of transactions and the domestic law will be amended to comply with the convention”
In addition, when it comes to obtaining records from Switzerland, Pakistan have always come across ambiguities. To cope with this problem, Pakistan is also looking to induct Swiss Bank in this treaty. As a result, the country would be able to secure records in a much easier manner. The source added:
“In case Switzerland becomes signatory of the treaty, it will help the FBR access information directly from the Swiss banks”
The agreement will help Pakistan to obtain critical information of offshore accounts of Pakistani nationals. Earlier, the national laws allowed for 10 years data of taxpayers that too in Pakistan only. Furthermore, the agreement also authorizes concerned agencies in Pakistan to travel and examine the records about the individuals in question.
It is pertinent to mention that Pakistan officially signed Multilateral Convention on Mutual Administrative Assistance in Tax Matters at OECD Headquarters in Paris on 14th September. By signing the agreement, Pakistan became 104th country in the world to be a part of the jurisdiction in the convention. According to the senior official, the treaty can take up to a year to implement.
FBR can exchange information about taxpayers in 3 ways:
1- Information on request
2- Spontaneous request
3- Automatic request
The advocate of Supreme Court, Dr Ikramul Haq stated:
“It is not a multilateral convention in its true spirit, as member countries are governed by their domestic laws”
Furthermore, he questioned:
“In the presence of laws such as Protection of Economic Reforms Act 1992 and Section 111 (4) of the Income Tax Ordinance 2001, how will any crackdown will be possible within Pakistan?”
The advocate also questioned the competency level of FBR while stating whether they will be able to secure information from foreign banks.
Do you think this deal will be proved fruitful for FBR in securing offshore account details of Pakistani nationals?
Source: The News