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Action against offshore income, assets abroad: Senate body allows FBR to remove five-year time limit

By Mehtab Haider
June 18, 2021
Action against offshore income, assets abroad: Senate body allows FBR to remove five-year time limit

ISLAMABAD: The Senate Standing Committee on Finance has granted its nod for allowing the FBR to remove time limitation for taking action against those who owned offshore income and assets abroad.

None of the members belonging to the Treasury or opposition benches raised any objections or even debated this new insertion into the Finance Bill for 2021-22.

Earlier, there was a restriction of five years but now there will be no time limitations after approval of this law from the National Assembly through the Finance Bill 2021-22. This new clause into the Income Tax Law will enable the tax machinery for moving against those who possessed foreign income and assets without any bar of time limitations.

The new clause inserted into the Finance Bill 2021-22 reads out that “Provided further that the time-limitation provided under this subsection shall not apply if the commissioner is satisfied on the basis of reasons to be recorded in writing that a person who failed to furnish his return has foreign income or owns foreign assets”.

The Senate panel also endorsed insertion of 146C into the Income Tax Ordinance 2001 stating that the “Assistance in the recovery and collection of taxes, the provisions of sections 138, 138A, 138B, 139, 140, 141, 142, 143, 144, 145, 146, 146A, and 146B shall mutatis mutandis apply in respect of assistance in collection and recovery of taxes in pursuance of a request from a foreign jurisdiction under a tax treaty, a multilateral convention, an intergovernmental agreement or similar arrangement or mechanism."

The Senate panel again discussed powers of FBR officers for arresting and prosecution on suspicion of concealment of income and Senator Farooq H Naek asked the FBR not to declare Pakistan a police state. He said that the FBR’s objective was to collect the taxes but not put people behind the bars. Senator Farooq H Naek and Senator Saadia Abbasi asked for omitting 203-A, B and other draconian clauses. However, Chairman of Senate panel Talha Mehmood was trying to find a middle way where the senators could rewrite this clause by granting powers to the chairman FBR or the minister for allowing arrest of potential tax evaders.

FBR’s Member Inland Revenue Policy Mohammad Tariq said the FBR did not want rampant usage of this law but it wanted to make 30 to 50 evaders as precedent for others in order to create deterrence.

The Senate panel rejected withdrawal income tax exemption on provident fund and medical allowances for employees. The salary of seafarers related exemption was also considered and the FBR committed to reviewing this proposal.

Executive Director of the All Pakistan Textile Mills Association (APTMA) Shahid Sattar appeared before the Senate Panel and said that the government jacked up the Sales Tax on import of machinery from 10 to 17 percent in the budget when the textile sector was investing $2.5 billion for installing green field plants in the country. He said as a result of this policy, Rs50 billion would be stuck up in the shape of refunds. The FBR’s Member IR policy assured that the refunds would be released through FASTER as this amount got doubled in the outgoing fiscal year. then details would be obtained about those living in the rented house.