FBR tells SC: Rs880m recovered from people holding foreign accounts, properties

ISLAMABAD: The Federal Board of Revenue (FBR) informed the Constitutional Bench of the Supreme Court that Rs880 million have been recovered from Pakistanis holding foreign accounts and offshore properties.

A six-judge bench, headed by Justice Aminuddin, and comprising Justice Jamal Khan Mandokhail, Justice Muhammad Ali Mazhar, Justice Hassan Azhar Rizvi, Justice Mussarat Hilali and Justice Naeem Akhtar Afghan, on Tuesday, heard cases regarding maintaining foreign accounts by Pakistanis without disclosing the same/ paying taxes, deadbeats got loans of Rs54 billion written off, cases of enforced disappearances, and the petitions against Supreme Appellate Court, Gilgit-Baltistan’s orders.

The bench disposed of foreign assets declaration case as advocate Hafiz Ehsaan Ahmad Khokhar, representing FBR, submitted a progress report regarding the actions taken on foreign currency accounts and offshore properties. Former chief justice Saqib Nisar in February 2018 had taken suo moto notice of offshore assets and accounts held by Pakistanis. He then constituted a 12-member Committee on 26-03-2018 with clear and unambiguous TORs with the direction to submit its report.

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During the proceeding, Justice Mandokhail questioned whether the FBR had traced the accounts and properties held by Pakistanis abroad? Justice Amin observed that after tracing the individuals the relevant has to recover the money.

Hafiz Ehsaan informed that the FBR implemented key recommendations of the committee to trace and bring back money to Pakistani bank accounts. He submitted that so far the FBR has recovered Rs880 million, adding the department is still recovering the money from the persons holding properties and bank accounts abroad.

The constitution bench on November 15, 2024 had directed the FBR to file a report stating that the orders passed by the Supreme Court from time to time have been complied with. He highlighted that several amendments were introduced in Income Tax Ordinance 2001 on the subjects of foreign assets declaration through filing independent wealth statements and remittances received more than one million in a year.

Through Finance Act 2018 amendment was made in Section 111(4)(a) of the Income Tax Ordinance, 2001, whereby, tax authorities were given legal mandate to inquire the nature and source of foreign remittance received by a taxpayer through banking channels which aggregate exceed Rs10 million in any given tax year. Through Finance Act, 2021 the limit was reduced from Rs10 million to Rs5 million.

Ehsaan stated that prior to the amendment a person was not required to explain the nature and the source in respect of any amount of foreign exchange which was remitted from outside Pakistan through normal banking channels and encashed into Pak rupees by any scheduled bank.

He informed that as suggested by the committee, an amendment was made in Section 111 (2) of the Ordinance, whereby, time limitation for taxation to any unexplained or concealed foreign income or assets has been eliminated. Previously, tax authorities could only levy tax and take cognisance of unexplained assets, investment or expenditure discovered up to five years and did not have mandate to levy tax on assets incomes and expenditure which were acquired made or incurred beyond last five years. Therefore, any unexplained foreign income or assets are liable to be taxed regardless of how old they are. Consequently, the time limitation of five years prescribed in Section 122 of the Ordinance will not apply to cases involving concealed foreign assets or income. Through Finance Act, 2024 necessary declaratory amendment was made in sub-section (2A) of Section 111 of the Ordinance, whereby, for the purpose of clause (ii) of sub-section (2) the “year of discovery of foreign assets or expenditure or concealed income”, shall mean the year in which the Commission has issued a notice requesting a person to explain the nature and source of such foreign assets, expenditure or concealed income.

A voluntary disclosure scheme was enacted through Finance Act, 2018 as the Finance Assets and Repatriation and Declaration Act, 2018. The scheme aimed to combat large-scale non-reporting and under reporting of income and assets outside Pakistan by providing a mechanism for the declaration, as well as, the repatriation of income and assets held outside Pakistan. Further, through an ordinance the federal government promulgated the Assets Declaration Ordinance, 2019 on May 14, 2019. A considerable number of Pakistanis declared their offshore assets in the amnesty schemes and paid taxes as was required under the amnesty schemes.

Ehsaan submitted that the FBR took action against all the individuals reported in various leaks without any discrimination. He further said that the FBR in collaborating with partner jurisdiction through the mechanism of exchange of information for tax purposes to get hold of relevant information relating to offshore assets held by Pakistanis abroad. FBR sends requests to partner jurisdictions for the provision of relevant information relating to assets held abroad, and when such information is received then action is taken accordingly under the relevant provisions of the Ordinance without any discrimination.

The Court adjourned the write-off loans case.

In missing persons’ case it issued notices to the interior secretary, Attorney General for Pakistan, and other parties and directed them to file reports in the instant matter.

Copyright Business Recorder, 2024