Banks to provide customers’ withholding data to FBR

ISLAMABAD: The banks have agreed to provide withholding data to the FBR and write letters to the customers, having Rs500,000 balance in their accounts, to avail themselves of tax amnesty if they had not declared the amount before the tax authorities.

Chairman FBR Shabbar Zaidi along with his team held a meeting with the Chief Financial Officers (CFOs) of banks at the FBR Headquarters here. According to the minutes of proceedings, seen by this reporter, Shabbar sensitised the CFOs to the FATF requirements where banks have to comply with the Know Your Customer (KYC). He asked the banks to provide the data of withholding taxes in the first stage. The banks representatives asked him about the mechanism of data handling. The collection of withholding data is aimed at getting information about mega transactions taking place and through this data the FBR would be able to identify non filers that could be used for broadening of tax base. With the help of CNICs the FBR will be able to trace them easily and can pursue them to come into the tax net. After detailed discussions, it was decided that in the first phase the banks will provide the data of withholding taxes w.e.f January 1, 2018 onwards with CNICs of the withholders to the FBR by June 17, 2019.

In this regard, the data of all the withholding sections will be provided by the banks. The bank representatives agreed to the timelines. Benami laws and Benami accounts also came under discussion. The chairman FBR sensitised the participants to the emerging scenario in the wake of Benami Transaction (Prohibition) Act, 2017 and emphasised that such business could not continue as usual and ‘we have to act fast in accordance with the needs of the law and our country’. Shabbar urged the banks to act fast for resolving the issue without causing any problem, panic, disturbance to their customers. It was also highlighted that the Assets Declaration Scheme 2019 is a window of opportunity through which this problem could be addressed in an effective way. The participants discussed different options and in the end it was agreed that the banks will write letters to their account holders having balance of Rs500,000 and above as on 30.04.2019 and guide them about availing themselves of amnesty. The draft of the letter will be shared by the FBR to the banks. In the proposed polite letter, the banks would request their customers to avail themselves of fresh tax amnesty scheme.

The banks would request their customers in writing that they must be aware of the fact that national and international compliance requirements are increasingly focusing on the monetary transactions carried on through banking and other formal and informal channels. Such requirements include income and assets declarations to the government as well as compliance with standards related to anti-money laundering requirements. The Benami Transactions Prohibition Act, 2017 (that has become fully operational since February, 2019) has further necessitated a more watchful regulatory environment. In order to regularize the otherwise undocumented economy, the Government of Pakistan has recently announced an Assets Declaration Ordinance, 2019 that provides a simple and easier manner of declaration of undisclosed assets, sales, expenses including amounts kept in the bank accounts.