KARACHI: Pakistan sees Middle East’s chase after tax evaders as a driver to foreign inflows from Pakistanis who have parked multibillion rupees in different avenues abroad, an official said on Saturday.
The official at the Federal Board of Revenue (FBR) said the commitment of Middle East countries to exchange tax information will expose several Pakistanis who have concealed income and assets and they may opt to bring back their money to homeland.
“This will increase inflows to Pakistan as such people would not park their money,” the official added.
Middle East countries, including Bahrain, Kuwait, Lebanon, Saudi Arabia and the United Arab Emirates pledged to identify tax compliance of expats and share their financial details under the Global Forum on Transparency and Exchange of Information for Tax Purposes from January 2018.
The Global Forum is the continuation of a forum, which was created in the early 2000s in the context of the Organisation for Economic Cooperation and Development’s work to address the risks to tax compliance posed by non-cooperative jurisdictions.
The official said a number of Pakistanis parked their ill-gotten money in banks of Dubai. Several studies found that they had billions of dollars in bank accounts.
Pakistan is also a member country of this forum, which has three key benefits, including detection of and deterrence from tax evasion and transparency improvement.
In 2015, the FBR approached the UAE authorities to get information of Pakistanis, who invested in Dubai. The attempt remained unsuccessful as the respective governments were reluctant to share the information, the official said.
“Currently, it is difficult to get information of an individual, who is Pakistan’s national, from Dubai banks,” the official added. “But, Pakistan will be able to get information automatically related to Pakistani nationals.”
FBR sources said the government will be pressurised to introduce a general amnesty following the expected bulk inflows from these countries.
Pakistanis are among the top property investors in UAE and invested $816 million in purchasing property during the first half of 2016. Furthermore, Pakistanis invested around $4.9 billion in Dubai’s real estate market during the last two and half years.
The FBR also decided to start exchanging information of bank accountholders with the member countries of the OECD from the mid of the next year to jointly combat tax evasion. Presently, the tax officials are discussing modalities with the banks to set up an online system.
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 already ratified the multilateral convention.
