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FBR poised for action against benami account holders


May 30, 2019

KARACHI: The newly-appointed FBR Chairman Shabbar Zaidi has convened a meeting on Thursday (today) with bankers to convince banks into sharing transaction details with the tax authorities, as a major crackdown against benami account holders is on the anvil following expiry of the new amnesty scheme, sources said on Wednesday.

The sources said the Federal Board of Revenue (FBR) decided to persuade banks to obtain details of account holders who make large financial transactions as well as of those maintaining benami accounts – falsely bearing other titles.

Banking industry sources said an important meeting of the FBR chairman with the heads of banks would be held on Thursday (May 30) in Islamabad. The FBR issued letters to chief executive officers / chief finance officers of all banks to attend the meeting, which would deliberate on and evolve modes operandi for the collection of information regarding banking transactions, the sources added.

Sources said banks are reluctant to provide details of all the financial transactions through monthly withholding statements owing to restrictions under banking secrecy laws. The issue is subjudice at various legal forums. Banks deduct withholding tax on cash withdrawal and online transactions from taxpayers and are responsible to share transaction details with the FBR under a law, they added.

The sources in the FBR said the chairman Zaidi is taking all possible steps for documentation of the economy and broadening of tax base. The meeting would primarily focus benami accounts and their transactions. The FBR would ask banks to provide details of withholding tax deductions from account holders as per the income tax law.

The FBR sources said the government is determined to improve documentation of the economy and the recently announced tax amnesty scheme for individuals with undeclared assets and money was a step in that direction. The assets declaration scheme allows documentation of assets under concessionary tax rates.

The sources said the FBR planned a major crackdown against individuals having assets in other or fictitious names once the amnesty scheme concludes on June 30, 2019. The FBR chairman on various occasions made it clear that those who would miss the opportunity to declare their concealed assets under the assets declaration scheme would have “difficult times” from July 1, 2019.

The latest amnesty scheme is different from the past amnesty that remained valid for four months till July 2018 and led to tax revenue generation of Rs120 to 125 billion on at least 70,000 declarations. Under the present assets declaration scheme, benami properties and bank accounts could also be declared against a nominal tax rate. The sources said the meeting of the FBR and banks’ heads would also discuss the tax collection from the banking system under various heads of Income Tax Ordinance, 2001.

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