Banks given 15 days to share foreigners’ data with FBR under OECD obligations

KARACHI: The Federal Board of Revenue (FBR) has given a 15-day timeline to banks and brokerages to furnish financial data of foreign customers as the country signed in an international convention for information exchange to curb tax evasion, officials said on Wednesday.

The officials said FBR directed financial institutions, including banks and stock brokers, to submit declaration about accounts maintained by foreigners till the end of the current month. They were asked to declare high-value accounts. A high value account means an individual maintaining above one million dollars account, the officials added.

FBR has already issued a list of 456 reporting financial institutions under common reporting standards for automatic exchange of information under the Organisation of Economic Cooperation and Development (OECD) convention. On September 14, 2016, Pakistan became the 104th economy to join the most powerful multilateral instrument against offshore tax evasion and avoidance. Reporting companies include asset managers, insurance agencies, stock brokers and banks.

Reporting financial institutions are required to file a nil return to indicate that it does not maintain any reportable account during the calendar year or other reporting period under the OECD treaty of tax evasion.

“A financial institution is required to file a return to the effect that it does not have any reportable account(s) during the relevant reporting period by May 31,” an FBR official said.

The official said an important meeting was convened at the FBR Headquarters in the first week of June to discuss the methodology of scrutiny under exchange of information.

The official said FBR would get comprehensive details of non-resident individuals maintaining accounts in Pakistan by September 30 for subsequent exchange of information.

The reporting financial institutions had initiated due diligence of reportable accounts in July 2017 to provide details of account activities.

Tax officials said the exchange of information would be vital for Pakistani tax authorities to identify individuals evading taxes by concealing income abroad.

The government has already announced an amnesty scheme giving a last opportunity of whitening undeclared foreign assets before the launch of information exchange. The amnesty scheme will expire on June 30.

In April, government announced tax amnesty scheme to give residents one-off tax benefits for repatriating undeclared local liquid assets with a five percent penalty, undeclared foreign liquid assets with a two percent penalty (if repatriated, or a five percent penalty if remaining abroad or in foreign currencies), and undeclared fixed assets – whether held locally or abroad – with a three percent penalty.