Automatic information exchange to start from 2018

KARACHI: Finance minister Ishaq Dar on Friday said that tax evaders will find no place to park their ill-gotten money, as Pakistan will begin automatic-exchange of information from next year.

“As per international agreement with OECD (Organisation of Economic Cooperation and Development), Pakistan will start automatic exchange of information regarding tax evasion from 2018, under which the local authorities would send and receive information,” he said at a meeting with the business community at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

He was replying to FPCCI president Zubair Tufail’s suggestion that the government should give tax amnesty to people who have parked their assets abroad or in the country at three percent of tax for the last time. Talking about the recent amnesties, he said that the government had extended amnesties to traders and real estate sector on the recommendation of the business community. “The government wants to give space instead imposing stringent laws,” Dar said.

The finance minister said that Pakistan had become a member of OECD by signing an agreement on Multilateral Convention on Mutual Administrative Assistance in Tax Matters on September 14, 2016. Dar further informed that Pakistan would become a member of another international community for ensuring transparency as the  government had presented Letter of Intent (LoI) for joining this community.

He said that so far, 15 requirements out of 16 had been met to get the membership. “Locally the government has also tightened laws to detect tax evaders through changing parameters of tax audits,” he said.

The finance minister highlighted achievements of his government during the past four years and said that some opponents were still criticising Pakistan’s economic growth. “Economy should not be politicised,” he said.

Clarifying figures quoted by the FPCCI president regarding electricity generation under China-Pakistan Economic Corridor (CPEC), he said that only 5,000MW electricity would be generated under the CEPC out of 25,000MW.

“The government is working through its own resources to generate 20,000MW,” he added. He further informed that about 10,000MW would be added to the transmission by March 2018.

He said that the top priority of the government was to achieve financial discipline, which was achieved. “Now the government is eyeing to attain 6-7 percent GDP growth on annual basis,” he said, and added that this year the growth would be above 5 percent. Commenting about Rs180 billion export package announced by the prime minister, he said that the business community had assured that this package would yield in the next six months.

Dar said that the Federal Board of Revenue (FBR) was facing Rs126 billion revenue shortfalls in the first six months due to incentives given to the general public and industries.  The minister said that the government had not passed on the increase in oil prices during the last year except marginal increase during the past month. He also pointed out that the sales tax rate on fertiliser was reduced, which also impacted revenue collection.  He said that in the last budget, the government had announced the largest ever agriculture package in the history of Pakistan.

Commenting on the reservation of FPCCI on rising public debt, he said that it was increased sharply in the previous government. He calculated that when the present government had taken over, the total external debt was $47 billion, and if the $4 billion reserves of the State Bank of Pakistan (SBP) were excluded, it came at $43 billion.  “But now it is in better position, as the total external debt is at $57 billion and reserves of SBP at $18 billion, therefore payable is $39 billion,” he added.

The finance minister said that the country was on the verge of a deficit in 2014, but due to consistent efforts now the country was stable. “Now we want the destiny of the country to lead Muslim countries,” he added.