FBR authorised to get information from banks

ISLAMABAD: The first batch of withholding data from all banks will be made available to the FBR in the third week of ongoing month that will be used into databank developed with the help of Nadra to broaden the narrowed tax base.

The databank developed with the help of National Database Registration Authority (Nadra) possessed all kinds of data about potential non-filers but it had a missing links of banks data into it. The FBR was now confident that the data of withholding deductions would be shared by the banks with the FBR from June 18, 2019, helping the tax machinery to launch pilot project from July 1, 2019 for broadening of tax base.

When the FBR wrote lettersto all banks for sharing minutes of meeting held with them they also sent out official communication to the SBP for information to the regulator. The SBP in its reply told the FBR that the central bank did not possess data of customers but under the law of the land the banks could provide the same directly.

When top official of State Bank of Pakistan (SBP) was contacted for comments on Friday, he said that the FBR was empowered to get data from the banks under income tax law. “Whatever is allowed under the law, the banks will share data with the FBR,” he added. The SBP, he said, did not have depositors’ data so the FBR could get it directly from the banks under the relevant provision of Income Tax Law.

The FBR official said that the SBP is fully assisting the FBR for securing the data from commercial banks. The SBP itself does not have data of account holders and no such information has been asked by the FBR from the regulator. The commercial banks have their depositors’ data and withholding details and it is expected that it will be shared with the FBR within a couple of weeks.

The section 165A of Income Tax Ordinance enables the FBR to get the data from the banks. The section 165A of Income Tax Ordinance 2001 states that notwithstanding anything contained in any law for the time being in force including but not limited to the Banking Companies Ordinance, 1962 (LVII of 1962), the Protection of Economic Reforms Act, 1992 (XII of 1992), the Foreign Exchange Regulation Act, 1947 (VII of 1947) and the regulations made under the State Bank of Pakistan Act, 1956 (XXXIII of 1956), if any, on the subject every banking company shall make arrangements to provide to the Board in the prescribed form and manner,— (a) online access to its central database containing details of its account holders and all transactions made in their accounts; (b) a list containing particulars of deposits aggregating rupees one million or more made during the preceding calendar month; (c) a list of payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to rupees one hundred thousand or more during the preceding calendar month; (d) a consolidated list of loans written off exceeding rupees one million during a calendar year; and (e) a copy of each currency transactions report and suspicious transactions report generated and submitted by it to the Financial Monitoring Unit under the Anti-Money Laundering Act, 2010 (VII of 2010).

(2) Each banking company shall also make arrangements to nominate a senior officer at the head office to coordinate with the Board for provision of any information and documents in addition to those listed in sub-section (1), as may be required by the Board. (3) The banking companies and their officers shall not be liable to any civil, criminal or disciplinary proceedings against them for furnishing information required under this Ordinance. (5) Subject to section 216, all information received under this section shall be used only for tax purposes and kept confidential.

Independent tax experts argued that the FBR would have to build up its capacity to effectively utilise data for broadening of tax base. First of all, the banks and FBR will have to develop software that must have capability to talk to each other through connectivity. Secondly this IT enabled data should chip into the software to fill the missing links that could be converted into such databank having ability to bring non-filers without creating harassment.