FBR has obtained 485-page report from Singapore tax authorities
ISLAMABAD: The Senate Standing Committee on Finance under chairmanship of Senator Saleem Mandviwalla criticised the resurgence of circular debt despite declining oil prices at international markets and increase in electricity rates.
The Committee Chairman, Saleem Mandviwalla, noted that the circular debt was around Rs480 billion in five years, which was cleared in June 2013, but since then Rs321 has accumulated in this head.
“But the serious issue is that crude oil was at around $120 per barrel at that time and the electricity rates were Rs7 per unit – whereas oil is around $40 per barrel now and the power rate is Rs12 a unit,” said Senator Mohsin Aziz of the PTI. “Now my question is what is the reason for resurgence of circular debt.”
The Committee also discussed the release of Rs480 billion in one day to the power generation companies on June 27, 2013. “This is strange, it has never happened in the country--the ministry prepared the summary on June 27, the ECC approved it on the same day and the payments was released that day,” Senator Saleem Mandviwalla said adding, “This means that the summary was not even circulated and nobody actually read the summary --they were briefed and it was clear.”
The committee was told by the ministry officials that an MOU has been signed between the government and Independent Power Producers (IPPs) to convert their fuel base from oil to coal.
The committee was briefed about the MOU signed in 2013 and three IPPs have been granted tariff by Nepra--who are establishing infrastructure in this regard. The committee was informed about various segments of the MOU and the senators termed it as one sided to favour the IPPs only. “So it was only a cosmetic MOU--possibly to show that the IPPs too were doing something,” said Senator Mandviwalla. Finally, the committee decided to hold separate meeting on this issue.
In order to probe purchase of Saint James Hotel and Club at London by renowned business tycoon from Pakistan, the Federal Board of Revenue (FBR) has obtained 485 pages report from Singapore tax authorities on August 22, 2016, and now cross matching was under way to find out whether the owners of the hotel had declared it in their filed tax returns before Pakistan’s tax authorities or not.
The committee took up the issue of purchasing Saint James Hotel and Club by Mansha family and after debate the committee decided that the FBR should be given ample time to probe this matter, and the FBR should be given directions to update the committee on regular basis.
Senator Mushahid Ullah, belonging to PML-N, said that the committee was going out from its mandate because neither it’s authorised to initiate trial nor it could assume the power of an investigating agency.
However, the mover of the issue Senator Saeed Ghani from the PPP said that it was an eye wash because the FBR was not willing to investigate this matter. He alleged by showing documents that the board of directors of this company had decided to change the record in one of their meeting.
According to FBR’s written reply before the committee stating that the Board wrote a letter to the Her Majesty Revenue and Customs (HMRC) under Article 26 of the Convention between the United Kingdom and Islamic Republic of Pakistan regarding certain details in respect of the ownership of M/S Sea Capital Limited, UK, which in turn owns St James’s Hotel and Club located at 7 Park Palace, London. HRMC through their reply shared the available information with FBR. “The information so shared raised certain further questions which related to the parent company of M/S Sea Capital Limited namely M/S Residential Holdings PTE Limited Singapore,” the FBR states. The FBR accordingly wrote a letter to the Inland Revenue Authority of Singapore to clarify issues raised by the FBR.
In response to the FBR’s request, Inland Revenue Authority, Singapore, sought certain confirmation about confidentiality of information and conformity with the Pakistani laws and administrative practices. The FBR communicated the required confirmation. After the confirmation, the Singapore Tax Authority has provided the information which has been received on 22-08-2016. The information has now been communicated to the concerned investigation agency of the FBR for necessary investigation and further action will be taken accordingly, the written statement of FBR concluded.
However, when the senators inquired about the investigation agency of FBR which was assigned to investigate this matter, the FBR high-ups replied that it was FBR’s Intelligence and Investigation of Inland Revenues (IR).