KARACHI: The income tax law has made it mandatory for taxpayers to declare foreign income and assets in order to avoid penalty, Vishno Raja Qavi, former chief tax policy, Federal Board of Revenue (FBR), said on Thursday.
He was highlighting the key points of Automatic Exchange of Information (AEOI) at a seminar organised by the Karachi Tax Bar Association (KTBA).
He said under the newly introduced section, a resident individual, who has foreign income above $10,000 or has foreign assets above Rs100,000, was required to file statement under Section 116A of the Income Tax Ordinance, 2001.
Qavi said such taxpayer was also required to file normal tax return in order to avoid penalties.
He said the government had entered into a multilateral treaty for the avoidance of double taxation; and for the exchange of information for the prevention of fiscal evasion or avoidance of taxes. The treaty also included automatic exchange of information with respect to taxes on income imposed under the ordinance. He said that there were many tax heavens where illicit money had been parked. He informed that there were many modes of tax evasion and avoidance, including: corporate re-structuring; merger; de-merger; split of contracts; paper subsidiary. The tax heavens were also being used for parking drug money and plundered money through corruption.
The former FBR official said the board had started initiatives to net offshore tax evaders by forming six units of AEOI.