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November 9, 2019

FBR may restrict traders to record high-value transactions


November 9, 2019

KARACHI: The Federal Board of Revenue (FBR) is considering restriction on jewelers and real estate agents to report high-value transactions to the authorities.

The FBR on Friday issued a draft of amendments into Income Tax Rules, 2006, through a statutory regulatory order (SRO 1320(I)/2019), to introduce anti-money laundering initiatives. The drafted rules are aimed at to check suspicious transactions in the two important sectors.

The proposed rules make it mandatory for jewelers and real estate agents to maintain record transactions with value higher than Rs2 million in case of immovable properties and Rs1 million in other cases.

The FBR said jewelers and real estate agents should obtain and maintain documents related to buyers and sellers. The required particular includes a copy of computerised national identity card, national identity card for overseas Pakistanis, Pakistan origin card, alien registration card or passport.

The real estate agents and jewelers have also been asked to maintain a list of customers who couldn’t make transactions due to unavailability of such identity document.

The FBR said jewellers and real estate agents should mark a transaction as suspicious in the IRIS online system if transaction involves funds derived other than from the business activity or assets declared to the income tax authorities.

The proposed rules asked traders to mark the transactions, which are designed to evade any obligation under the Income Tax Ordinance 2001 or to conceal the beneficial owner or his activity.

The FBR also called for marking a transaction with no apparent economic or lawful purpose after examining the available facts, including the background and possible purpose of the transaction.

The jewelers and real estate agents would report an individual who uses a bank account other than an account maintained in the name of beneficial owner.

The FBR warns that if a designated individual fails to comply with the rules then his licence would be suspended forthwith.

The revenue body clarified that the tax authorities have a right to audit the transactions of jewelers and real estate agents.

FBR sources said the rules were drafted to ensure compliance with the conditions of the Financial Action Task Force (FATF).

The global watchdog FATF pointed out at weaknesses in the two sectors, while giving February 2020 as a deadline for Pakistan to comply with anti-money laundering standards to come out of its grey list.

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