Financial details of individuals/entities: FBR compiles list of 101 states on AEFI

The Federal Board of Revenue (FBR) has compiled an updated list of 101 countries under global treaties on Automatic Exchange of Financial Information (AEFI) to exchange financial details of individuals/entities with tax jurisdictions of these countries. Sources told here on Monday that the AEFI was an initiative of Organization of Economic Cooperation and Development (OECD) members and Pakistan has committed to starting exchange of financial information on automatic basis.
According to the FBR, this is the current list of intended exchange partners for automatic exchange of financial information. The list may be updated from time to time. The intended exchange partners for Automatic Exchange of Financial information are Andorra, Anguilla, Antigua and Barbuda, Argentina, Aruba, Australia, Austria, Azerbaijan, Bahamas, Bahrain, Barbados, Belgium, Belize, Bermuda, Brazil, British Virgin Islands, Brunei Darussalam, Bulgaria, Canada, Cayman Islands, Chile, China, Colombia, Cook Islands, Costa Rica, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Dominica, Estonia, Faroe Islands, Finland, France, Germany, Ghana, Gibraltar, Greece, Greenland, Grenada, Guernsey, Hong Kong (China), Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Italy, Japan, Jersey, Korea, Kuwait, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Macau (China), Malaysia, Malta, Marshall Islands, Mauritius, Mexico, Monaco, Montserrat, Nauru, Netherlands, New Zealand, Nigeria, Niue, Norway, Panama, Poland, Portugal, Qatar, Romania, Russia, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, San Marino, Saudi Arabia, Seychelles, Singapore, Sint Maarten, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Trinidad and Tobago, Turkey, Turks and Caicos Islands, United Arab Emirates, United Kingdom, Uruguay and Vanuatu, the FBR list added.
The FBR has implemented a procedure for Automatic Exchange of Financial Account Information with other tax jurisdictions or OECD (Organization of Economic Cooperation and Development) member countries under Multilateral Competent Authority Agreement. Pakistan has become a signatory to the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information on June 7, 2017.
The FBR had compiled a list of countries including Switzerland to ensure reporting by financial institutions to the said participating jurisdictions under global treaties on automatic exchange of information. Pakistan has signed the Multilateral Competent Authority Agreement (the CRS-MCAA) on 7th June, 2017 and its Annexure-E consists of a list of participating jurisdictions for automatic exchange of information. Under clause (am) of rule 78B of Chapter XIIA of the Income Tax Rules 2002, the reporting financial institutions are required to provide the information as specified in Rule 78C of the said rules to the FBR pertaining to the reportable persons of the jurisdictions to be identified in a published list to be made available on the FBR web portal. Multilateral Competent Authorities Agreement is related to exchange of country-by-country reports (CbC MCAA) aimed at sharing detailed financial and tax information of companies with OECD member countries. Pakistan signed Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MC) under the aegis of OECD (Organization of Economic Cooperation and Development), on September 12, 2016. Pursuant to Article 6 of the Convention two Multilateral Competent Authority Agreements were to be signed. One relates to automatic exchange of tax related information, which was signed on June 7, 2017, whereas the other, the Multilateral Competent Authorities Agreement is related to exchange of Country-by-Country reports ("CbC MCAA"). As the cornerstone of the OECD''s Base Erosion and Profit Shifting (BEPS) project, country-by-country reporting (CbCR) requires multinational enterprises to report detailed financial and tax information relating to the global allocation of their income and taxes, among other indicators of economic activity. The purpose of the CbC MCAA is to set forth rules and procedures necessary for the competent authorities of jurisdictions opting to automatically exchange CbC Reports filed by the MNE (Multinational Enterprises) Group in the jurisdiction of its tax residence, with the tax authorities of all jurisdictions in which the MNE Group operates.
It is of major significance for developing countries like Pakistan, due to their heavy reliance on corporate income tax, particularly from multinational enterprises. Therefore, countries like Pakistan have more to gain from exchange of CbC reports as quite a number of multinationals are assessed here.
Pakistan has put in place the required legal framework by making amendments in primary legislation through Finance Act 2016 and Finance Bill, 2017, by amending sections 107, 108 and 182. Secondary legislation on Country-by-Country (CbC) reporting has also been drafted and is being included as Chapter VIA of Income Tax Rules, 2002.