ISLAMABAD: The Federal Board of Revenue (FBR) seeks to further amend the Assets Declaration (Procedures and Conditions) Rules, 2019. Through a notification issued here on Tuesday, it has made the Draft Assets Declaration Rules 2020 public, inviting suggestions and objections, if any, from people who are likely to be affected by this step. It has been learnt that these draft rules relate to the Assets Declaration Act, 2019.
Under the draft rules, no declaration shall be declared void unless definite information regarding misrepresentation or suppression of facts is available with the commissioner Inland Revenue.
The FBR has explained the treatment of asset, income or expenditure in a declaration.
The amount of asset, income or expenditure in a valid declaration shall not be included in the taxable income of the declarant for any tax year up to and including tax year 2018 under the Ordinance.
The rules state that no proceedings under any provision of the Ordinance shall be initiated on the basis of any information relating to an asset, income or expenditure as at June 30, 2018 or any prior period, provided the declarant files an irrevocable written statement along with plausible documentary evidence to the effect that source to that extent has been declared in the declaration irrespective of the form of the asset or jurisdiction at the date of filing the declaration.
The proposed rules further say that the nature and source of asset, income or expenditure shall not be treated as explained and the commissioner Inland Revenue or his delegate shall be entitled to proceed under section III of the Income Tax Ordinance, on the basis of definite information acquired from any source other than a valid declaration itself, in following cases: Where the value of asset, income or expenditure, as at June 30, 2018, as per the definite information is in excess of value as per declaration and where the source of asset, income or expenditure relates to a person other than the declarant.
It has also been stated that where an action under Section 111 of the Ordinance as undertaken in accordance with sub-rule (2) results in invalidation of the declaration then such an action cannot be initiated without prior approval, for reasons to be recorded in writing, of the chief commissioner Inland Revenue as defined in clause (lIB) of Section 2 of the Ordinance.
About the declaration filed and the information under the common reporting standard (CRS), the rules said where a foreign asset or income is reported to the Board under CRS, then prior to any action under any provision of the Ordinance, the board shall ensure compliance of the conditions under the Protocol for CRS including exchange of information by the person whose information has been received.
On completion of that process, the following procedure shall be followed: First, the commissioner Inland Revenue of the concerned person or delegate of the commissioner shall issue a notice under Section 176 of the Ordinance.
Second, the notice referred in clause (a) of the rule shall enquire as to whether or not such asset, income or expenditure has been declared under the Voluntary Declaration of Domestic Assets Act, 2018, and the Foreign Assets (Declaration and Repatriation) Act, 2018 or Assets Declaration Act, 2019.
Third, if the taxpayer informs the commissioner Inland Revenue or his delegate that the asset, income or expenditure, as reported under the CRS has been declared in a declaration, the commissioner Inland Revenue or his delegate shall require the taxpayer to provide a copy of the declaration.
Fourth, the taxpayer on receipt of such notice under Section 176 of the Ordinance shall provide a copy of his declaration where such asset, income or expenditure, as the case may be, has been declared; and provide a copy of the declaration of another person, being the beneficial owner, where the asset, income or expenditure referred to in the CRS has been declared.
The rules state that subject to the provision of Section 11 of the Assets Declaration Act, 2019, in case the information received under the CRS and the declaration are in agreement then a confirmation in writing shall be issued by the commissioner Inland Revenue or his delegate that the asset, income or expenditure to the extent referred to in the letter has been declared under the respective declaration law.
In case of matter relating to legal or beneficial ownership of an asset, income or expenditure, the claim of beneficial ownership shall not be questioned unless there is definite information that the asset was created out of sources of a person other than the person claiming the beneficial ownership.
Where in case of a foreign trust the contribution to the trust is sourced by any person other than settlor, beneficiary or the trustees, the person so contributing shall be entitled to declare his contribution under the Act irrespective of the settlor, beneficiary or any other person. Such declaration shall not be called in question merely on account that such person is not the settlor, beneficiary or trustee of the trust.
The status of a person as to the holder of public office or otherwise, and the period during which a person remained holder of public office shall not be questioned or challenged by the commissioner Inland Revenue or his delegate, if the same is confirmed by the relevant office.
No declaration by a person entitled to file a declaration under the Act shall be questioned only for the reason that the declarant is a relative other than spouses and dependent children of the declarant of a person being a holder of public office unless it is confirmed through a definite information that the asset, income or expenditure have been created out of the undisclosed sources of a holder of public office.
Immunity from proceedings under any other law: Subject to Section 11 of the Assets Declaration Act, 2019, no proceedings in respect of a legally valid declaration shall be undertaken under any other law for the time being in force, including Foreign Exchange Regulation Act, 1947, Protection of Economic Reforms Act,1992, and the Anti-Money Laundering Act, 2010 (to the extent of section XII-A of the Schedule) or any rules, notifications or orders made thereunder with respect to assets, income or expenditure declared under the Act. These rules shall apply, mutatis mutandis, on declarations made under the Voluntary Declaration of Domestic Assets, 2018 and Foreign Assets (Declaration and Repatriation) Act, 2018.
The proceedings under Section 122 of the Ordinance shall be preceded by a notice under these rules to the effect of facts available with the FBR and those given in a declaration. The declarant shall be provided with an opportunity of being heard.
The information contained in a legally valid declaration shall not be used in any manner to initiate the proceedings for misrepresentation and suppression of asset, income or expenditure. No declaration shall be declared void under Section 13 of the Act unless definite information regarding misrepresentation or suppression of facts is available with the commissioner Inland Revenue or his delegate, the FBR added.
Copyright Business Recorder, 2020
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