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Govt empowers FBR to detect offshore accounts

Govt empowers FBR to detect offshore accounts

ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday issued a notification to give powers to the officers of Directorate General of International Tax Operations. These powers have been given to operationalise section 230-E of the Income Tax Ordinance that was added into the law in February but remained non-operational due to lack of powers to the officers.

The government took four months to issue a notification that has denied it benefits that it could accrue by using the information provided by the Organisation for Economic Cooperation and Development (OECD) about 152,000 bank accounts that have $7.5 billion deposits.

Section 230E deals with all matters related to offshore jurisdictions, allowing the tax authorities to get information from abroad, process it and chase the Pakistanis who own these assets but have not declared in their wealth statements filed with the FBR.

Section 230E had given effect to Directorate General of International Taxes that comprises of director general, directors and additional directors.

The PTI government had introduced section 230E through the Second Supplementary budget that overrides the earlier offshore taxation regime.

According to the notification, the FBR has given the Chief Commissioner’s powers to Director General International Taxes, Commissioner’s powers to directors and additional commissioners’ powers to additional directors.

The sources in the FBR said that the notification will help to make the directorate general operational but legally speaking the directors cannot exercise the powers of the commissioners.

Background discussions with senior tax officials and statement given by the director general of international taxes in the National Assembly Standing Committee on Finance revealed that the government had stopped chasing offshore bank accountholders since February this year.

The standing committee had been told that after January the FBR did not serve notices to offshore account holders because the amnesty was in the air.

However, sources told that the existing offshore tax regime became dysfunctional after an amendment introduced by the PTI government in February this year. There were also differences among the taxmen whether the February legal amendment should be retained in the law or it should be deleted, they added.

In 2017, the Pakistan Muslim League-Nawaz (PML-N) government had set up Automatic Exchange of Information Commissionerates in three big cities to deal with offshore information provided by the OECD. This setup worked till mid-February and it processed nearly 340 cases on the basis of OECD information.

Out of 152,00 bank accounts, the FBR processed only those bank accounts where deposits were in excess of $500,000 or Rs80 million. International Taxes Director General Mohammad Ashfaq said $7.5 billion were deposited in these 152,000 accounts and over $4.5 billion was owned by just 650 people.

The FBR did not consult the international taxes wing before the introduction of the concept of Directorate General of International Taxes, an officer privy to these discussions told The Express Tribune.

Under Section 207 of the income tax law, only 15 types of officers can use the income tax law powers. The post of director is not among these 15 listed categories and its equivalent is a commissioner but Section 230E does not list commissioner as an authorised officer.