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June 13, 2019

Tough laws sought to fight offshore tax evasion

Business

June 13, 2019

ISLAMABAD: Tax authorities have proposed new stringent measures, including up to seven years of jail and making offenders’ names public, to combat offshore tax evasion in a bid to allow the government to receive billions of rupees in revenue currently lost in overseas safe havens.

The Federal Board of Revenue (FBR), in the Finance Bill 2019-20, has proposed under section 192B of Income Tax Ordinance stating that: “any person, who fails to declare an offshore asset to the commissioner or furnishes inaccurate particulars of an offshore asset and the revenue impact of such concealment or furnishing of inaccurate particulars is Rs100,000 or more, shall commit an offence punishable on conviction with imprisonment up to seven years or with a fine up to two hundred percent of the amount of tax evaded or both”. The FBR has also proposed powers to publish names of evaders in the print and electric media for possessing owning offshore assets with value exceeding Rs2.5 million through Finance Bill 2019-20.

The FBR has proposed amendment in section 216 (disclosure of information by a public servant) of the Income Tax Ordinance 2001.

Notwithstanding, anything contained in any other law, for the time being in force, where on the basis of information received from any offshore jurisdiction, the commissioner has reason to believe that such person, who is likely to leave Pakistan may be involved in offshore tax evasion or such person is about to dispose of any such asset, the commissioner may freeze any domestic asset of the person including any asset beneficially owned by the person for a period of 120 days or till the finalisation of proceedings including but not limited to recovery proceedings under this Ordinance whichever is earlier.

Finance Bill 2019 has also proposed amendment in section 145 (assessment of persons about to leave Pakistan). Under the amendment, the commissioner may freeze any domestic asset of the person, who is likely to leave Pakistan and may be involved in offshore tax evasion or such person is about to dispose of any such asset.

Under Finance Bill 2019, “offshore asset” in relation to a person, includes any movable or immovable asset held, any gain, profit, or income derived, or any expenditure incurred outside Pakistan.

The “offshore enabler” means a person who owns, possesses, controls, or is the beneficial owner of an offshore asset and does not declare, or under declares or provides inaccurate particulars of such asset to the commissioners.

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