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February 23, 2020

Tax authorities recover Rs1.8 billion from foreign transactions

Business

February 23, 2020

KARACHI: Authorities have recovered Rs1.8 billion from untaxed offshore funds after they began sharing in bank account details under an international framework agreement to automatically swap information, officials said on Saturday.

The tax was collected by the Karachi office of Automatic Exchange of Information (AEOI) Zone, which was formed after Pakistan signed multilateral convention on Mutual Administrative Assistance in Tax Matters in September 2016 with the Organization of Economic Cooperation and Development (OECD).

A senior official of the FBR while talking to The News International on the occasion of inauguration of Directorate of International Tax Operations said the zone had created a tax demand of Rs4.4 billion during past 13 months (January 2019 to January 2020) and recovered Rs1.8 billion.

“The recovery of the remaining amount is in litigation and the zone was hopeful the cases would be in favour of the FBR,” said the official, who requested anonymity due to confidentiality clauses under the OECD treaty.

The official said since the signing of the international agreement, Pakistan had received information of Pakistanis who made financial transactions abroad. Pakistan had received information for the year 2018 and 2019.

“In the first year, the FBR received information from 27 countries and in the next year from 55 countries,” the official added.

The official said information of Pakistan was mainly related to financial transactions, including banking, stock and debt securities. The purchases of immovable properties in foreign jurisdictions were not part of the AEOI.

“The zone would have recovered a much higher amount, but identified persons under the exchange of information availed the last tax amnesty scheme introduced in mid of 2019,” the official added.

“Pakistan will receive more information of resident persons from foreign jurisdictions in September 2020.” The country will also share information of foreigners making transactions in Pakistan.

In this regard, the FBR asked financial institutions including banks, stock exchange and insurance companies to provide

details of financial transactions made by foreign nationals till May 31, 2020.

Talking about establishment of Directorate of International Tax Operations, the official said the directorate was set up to strengthen domestic laws.

The directorate had mandate to receive and send information from other countries under spontaneous, automatic and on demand exchange of information under exchange of information agreements, the official said.

The directorate has also been authorised to levy and recover tax by passing an assessment order in case of undeclared off-shore assets and incomes.

The directorate had been authorised to receive, transmit and exchange country reports to member countries of the OECD, the official added.