FBR unearths Rs60 bn overseas transactions scam

ISLAMABAD: The Federal Board of Revenue (FBR) has unearthed a mega scam involving Rs60 billion overseas transactions, made by a foreign company to 70,000 individuals, who did not mention those to the tax authority, The News has learnt.

Investigations into the scam needed issuance of show-cause notices to 70,000 individuals. The exercise is likely to fetch about Rs10 billion taxes and expand the tax net, added the sources. The amount was sent by a company registered in the US, but it has no trace in Pakistan. Remittances were sent by engaging different 27 banks on the sale of different items and freelancer consultancy.

The FBR officials told this correspondent that out of 70,000 individuals, 45,012 were not registered with the FBR. And 17,985 had filed income tax returns with the FBR but did not pay any tax. They never showed any income from the international remittances. Other 12,618 individuals were registered with the FBR and had an NTN, but did not pay any tax, neither filed the Tax returns.

The Commissioner Offshore Taxation, Islamabad, in collaboration with the DG International Taxes, initiated investigation for the money/ income received by Pakistanis on account of provision of various freelancer consultancy services and sale of goods to various individual clients by using the Payoneer Inc. platform.

The Payoneer, being a US-based company, has no physical presence in Pakistan. A statement, issued by the Islamabad Income Tax Commissionerate, read that the payments by the foreign clients were made in the Payoneer account of the individual Pakistanis in the USA and the person withdrew the same from the Payoneer Inc. account, maintained by Mobilink Micro Finance Bank Limited (MMBL) either through Jazz Wallet or from their Pakistani accounts, maintained with any local bank inside Pakistan.

The investigation showed that by engaging MMBL and 27 Pakistani banks, which were used by the Pakistani clients for withdrawal of the foreign source income remitted through Payoneer, depicted a huge amount of Rs60,308,760,650, disbursed to 75,615 beneficiaries as their foreign source income in less than two-and-a-half years.

Out of this, 45,012 beneficiaries are unregistered individuals, while out of remaining 30,602 beneficiaries, only 17,985 are filers and the rest 12,618 are non-filers.

The exercise carried out by the Directorate of International Taxes, Islamabad has resulted in identifying the huge number of 45,012 persons who are liable to be registered and pay tax on the income earned through Payoneer.

In the case of non-NTN holders, compulsory registration is to be carried out by the FBR. The News has learnt that the FBR is to issue bulk notices to individuals who are registered but are non-filers and also to those filer individuals who have not declared the taxable foreign income in Pakistan.

Sources in the FBR told this correspondent that the overall impact of the tax revenue is expected to be more than Rs10 billion, which is easy to levy and recover on account of the information being of definite nature. This will not only result in the broadening of tax base, but also will improve the overall tax-to-GDP ratio of the country by adding genuine taxpayers having regular foreign income.

Moreover, on the basis of significant economic presence of Payoneer in Pakistan as well as its services originated from outside Pakistan, but terminated within the territorial jurisdiction of Pakistan, tax proceedings against Payoneer have also been initiated under the Income Tax Ordinance, 2001 and Federal Excise Act, 2005.