Pakistan to exchange bank accountholders’ details with OECD

KARACHI: Pakistan’s tax authorities decided to start exchanging information of bank accountholders with the member countries of the Organisation for Economic Cooperation and Development (OECD) from the mid of the next year to jointly combat tax evasion, officials said on Saturday.

“The FBR (Federal Board of Revenue) is discussing modalities with the banks to set up a system for exchanging information with member countries of OECD,” a senior tax official said, requesting anonymity. “This system will be applicable from the tax year 2018 (July 2017-June 2018).”

Pakistan, in September, signed the OECD multilateral convention against offshore tax evasion and avoidance. The convention provides all forms of administrative assistance in tax matters, including on-request, spontaneous and automatic information exchange, tax examination and collection assistance. The cabinet has ratified the multilateral convention.

The official said all the three regulators, including FBR, State Bank of Pakistan (SBP) and Securities and Exchange Commission (SECP) are putting in their efforts to make this system workable from the next year onwards.

The FBR official said the tax authorities held meetings with executives of banks to discuss the new changes and automatic exchange of information of non-resident accountholders.

The official said the new system would enable OECD members to receive information about bank accounts of their nationals in Pakistan. “Likewise, we will also able to get information of our citizens having bank accounts abroad.”

“An important meeting was held in Islamabad with the officials of HM Revenue and Customs (UK’s tax authority) to resolve the issues pertaining to online dissemination of information about account holders,” the official added.

The government, in the budget 2015/16, introduced amendments into the income tax laws. Under these changes, financial institutions, including banks, are required to provide information about non-resident persons to the FBR for the purpose of automatic information exchange under a bilateral agreement or multilateral convention.

Similarly, the government also brought changes into the Anti-Money Laundering Act 2010. A new corporate law -- Companies Ordinance 2016 – was also introduced to improve corporate governance. The law went in abeyance after the senate disapproved the ordinance and referred it to the parliament for an approval.

Tax official said FBR, SECP and SBP are working on various projects to check money laundering by both individuals and corporate entities.