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New legislations worldwide to result in confiscation of foreign funds, warns FBR chief Tariq Pasha

New legislations worldwide to result in confiscation of foreign funds, warns FBR chief Tariq Pasha

KARACHI: Chairman Federal Board of Revenue (FBR) Tariq Mehmood Pasha, while highlighting the problems likely to be faced if anyone chooses not to declare foreign assets under Amnesty Scheme, stated that countries around the world have devised new legislations and are strictly monitoring and investigating foreign funds which will ultimately be pinpointed and confiscated abroad even before the FBR identifies such funds.

Speaking at a meeting during his visit to Karachi Chamber of Commerce & Industry (KCCI), Chairman FBR stated that it was the final chance to bring back these assets to Pakistan which would otherwise be confiscated abroad if the possessor could not explain.

Chairman Businessmen Group Siraj Kassam Teli, Vice Chairmen BMG & former Presidents Tahir Khaliq & Haroon Farooki, President KCCI Muffasar Atta Malik, Senior Vice President Abdul Basit Abdul Razzak, Former President AQ Khalil, Special Assistant to Chairman FBR Malik Amjad Zubair Tiwana, Executive Director State Bank Saleemullah Khan and KCCI managing committee were also present at the meeting.

Chairman FBR further stated that confidentiality is a must in the Amnesty Scheme laws. “This scheme is not for funds obtained through corruption and not for crime proceeds but is only for those businessmen who transferred funds abroad from their own businesses without paying taxes”, he said, admitting that the system was weak and marred with loopholes in the past which paved way for easily transferring funds abroad.

He urged the business community to bring back funds to their own country by paying a meager tax of just 2 to 5 percent.

In response to a suggestion pertaining to further relaxing the procedure for remitting funds, Chairman FBR said that International Anti-money laundering laws and Financial Action Task Force (FATF) regime refrain us from further relaxing this scheme which is the basic reason why it is mandatory to declare foreign funds and send the applicable tax on these funds either from personal account or from sister’s, brother’s, wife’s, son’s, daughter’s or parent’s accounts.

He said that there were some hindrances in way of Amnesty Scheme which were taken care of that resulted in proper take off of this scheme. “Two schemes were announced by the government and it was a matter of pride that after Eid ul Fitr, a huge take off has been witnessed in both which clearly indicates that these schemes have been warmly welcomed”, he added.

Chairman FBR further stated, “Pakistan has become a member of Multilateral Convention Agreement between 102 countries, enabling us to gain access to information of those Pakistanis who have bank accounts abroad with effect from September 1, 2018.”

He further said, “FBR and another government department are currently working on a list of Pakistani individuals having properties in Dubai and many of these individuals are being questioned.”

“Previously, FBR had no access to such details but now this information was being shared with us by the authorities in Dubai. As a test case around 100 cases of such properties were sent to Dubai, of which FBR has received details about 55 cases including their names, addresses, size and worth of properties which have been verified by the taxation authority in Dubai.

Hence, the FBR doesn’t require further evidence as the details sent by a foreign government department is an admissible evidence in the court of law”, he added.

Tariq Pasha further commented that changes have also been introduced in the Withholding Tax Regime as initially, the banks were not sharing information with FBR but now, a threshold about deduction of withholding tax has been agreed upon hence, the information is being shared with the FBR in case an accountholder exceeds the withholding tax limit.

“Furthermore, if remittances of more than 100,000 dollars per annum arrive in any bank account in Pakistan, the recipient will be asked about the source of such remittances”, he added.

He further informed that FBR has also obtained details of local investments in new real estate projects and it was found that many individuals have massively booked properties in such projects. While examining such cases, an individual was found who booked 20 apartments worth 40 million each, he noted.

When asked who has access to FBR’s portal containing confidential information of taxpayers under Amnesty Scheme, Chairman FBR said that only Member (Inland Revenue-Policy) FBR Dr. Muhammad Iqbal currently has access to this confidential data, which would also be shared at lower level with Commissioners at a later stage. In response, deep concerns were expressed by KCCI representatives who feared that such confidential data will be misused to harass taxpayers therefore, nobody should be given access to such data. However, it was assured that strictest action including one year imprisonment and a fine of Rs1 million or both will be imposed on any government servant found guilty of misusing confidential data.

KCCI’s representatives were of the opinion that as the existing taxpayers are further squeezed all the time to achieve revenue targets, the same may also happen with those taxpayers, who avail the amnesty scheme therefore, there is a dire need to clarify the confidentiality of taxpayers’ details in Amnesty Scheme.

Chairman BMG Siraj Kassam Teli, in his remarks, pointed out that the Amnesty Scheme has suffered a lot of delays due to political issues but it was ultimately launched by PML-N government just before its departure.

Later on, the Supreme Court also took suo motto notice of the Scheme, which triggered uncertainty amongst individuals who remained dubious about the fate of Amnesty Scheme. “It was being expected that this scheme may go through some changes or the honorable Supreme Court may completely deny it, however go ahead was given to it but the court’s decision has not been issued in writing so far”, he noted, adding that because of all these issues, a lot of time has been wasted and now with hardly 5 days left, the demand to extend this scheme seems fair enough.

He stressed that the government and State Bank of Pakistan must take the demand for extending Amnesty Scheme into consideration as now is the right time as people fully understand this scheme and it has picked up some pace.

Siraj Teli stressed that Pakistan needs these funds being remitted through Amnesty Scheme as the country’s foreign exchange reserves were rapidly depleting and the need for once again approaching the IMF for assistance was being felt. “If Amnesty Scheme is resulting in gathering the desperately needed funds then there is no harm in extending it for a period of at least 15 days or a month in the larger interest of the country”, he added.

He further advised Chairman FBR to devise some kind of a mechanism or an effective strategy to discourage wrongdoing by people. “The current taxation mechanism is marred with flaws which keeps many people away from tax net. If these flaws are wisely addressed, I don’t think any individual would hesitate in paying his taxes or hide funds abroad”, he added and urged the FBR to refrain from carrying out unnecessary interrogation and questioning, which triggers the element of fears amongst the masses who prefer to stay away from FBR. If it actually happen, a lot of funds would automatically pour into Pakistan.

Underscoring the need to ease payment system under Amnesty Scheme, Chairman BMG pointed out that State Bank recently issued an addendum in this regard in which remittances have been allowed either by the individual himself from his personal account or from any other account belonging to his next of kin only which is not a wise decision as it has triggered fear and anxiety amongst people. Such restrictions discourage individuals and prove favorable for consultants and lawyers only, he opined.

He was of the opinion that funds transferred abroad by business community are those which they extracted from their own businesses and their only fault is that they transferred funds without paying the income tax whereas the rest of the people have sent billions of dollars abroad by stealing public’s money or funds obtained through corruption.