After establishing tax amount: Pakistan can only request foreign countries for tax collection

ISLAMABAD: The automatic exchange of information under the OECD mechanism does not enable Pakistani tax authorities to prosecute tax evaders residing at major foreign destinations but Islamabad can forward formal request to other countries for recovery of due tax amount against them.

Top official sources said that after establishing tax amount from all relevant forums within the country, Pakistan can forward formal request to foreign tax jurisdictions including the UK, UAE, Malaysia, Malta, Canada and others to help in recovery of tax amount against any individual. So far, the FBR had not opted for any such provisions under automatic exchange of information from the Organization of Economic Cooperation and Development (OECD) mechanism or bilateral tax treaties struck with different countries. The non-resident Pakistanis could avail themselves of thisongoing tax amnesty scheme as the FBR sorted out details about top individuals who owned more than $1 million into their bank accounts so they could avail themselves of the ongoing tax amnesty scheme to clear piled up tax liabilities.

The FBR obtained data about 152,000 non-resident Pakistanis under OECD mechanism out of which the FBR selected top 452 individuals who possessed over $1 million in their accounts and sent out notice. Now in some cases, the postal addresses found incorrect within Pakistan. Now when the foreign tax jurisdictions were requested to share more details they were not so welcoming. When asked whether Exchange of Information could enable Islamabad to prosecute them with the help of tax administration of other countries, the official sources said that it could not be done. However, Pakistan could avail itself of one chance where tax authorities could seek assistance of other jurisdictions in recovery of established tax amount against any individual.

Under the OECD mechanism, the member countries shared details about 152,000 non-resident Pakistani individuals with the FBR in September 2018 having deposit of roughly in the range of over $10 billion in their bank accounts.

Now the FBR is eyeing that these potential non-resident Pakistanis living in major countries including UK, Dubai, Malaysia, Malta and Canada might prefer to avail themselves of the ongoing tax amnesty scheme because they knew that the FBR possessed information about their bank accounts having deposit of over $1 million.

The FBR had sent out notices to them but some addresses found incorrect so nothing substantial on account of collection of any due taxes could be materialised.

When contacted, FBR’s Member Inland Revenue (IR) Policy and Spokesman Dr Hamid Ateeq Sarwar said this week that the FBR could not share any details on exchange of information data obtained from OECD mechanism, however, there was opportunity available under the ongoing tax amnesty scheme to avail by all those who possessed un-declared accounts or assets to regularise by paying nominal tax before expiry of its deadline. He said that the data of non-resident Pakistanis was available with the FBR so they should come forward and avail themselves of this ongoing scheme.

The official sources said that non-resident Pakistanis were showing interest to avail themselves of the ongoing amnesty scheme as one such person two days back contacted the FBR and obtained payment slip identification for declaration (PSID) for whitening of $400,000. Now it is yet to see whether the tax authorities succeeded to convert this interest into materialising for attracting more declarations and collecting due taxes or it just remained a dream and the scheme failed to attract more till expiry of its deadline on June 30.