Exchange of financial information: FBR unveils list of 645 entities

The Federal Board of Revenue (FBR) has issued a list of 645 financial institutions, banks, investment/asset management companies, microfinance institutions and brokerage houses registered with the Board for the purpose of automatic exchange of financial accounts information under the Common Reporting Standard (CRS) rules.
It is learnt that the list contains names of financial institutions registered with the FBR for automatic exchange of financial accounts information under the CRS. Sources said that the FBR has specified common reporting standards for financial institutions for automatic exchange of information including banking information with OECD member countries under bilateral agreement/multilateral convention, including agreements of avoidance of double taxation and prevention of fiscal evasion.
According to the sources, exchange of banking information has been proposed to be carried out between tax authorities of Pakistan and OECD member countries under the common reporting standards. Around 105 countries of the world would follow the same common reporting standards for automatic exchange of information under OECD model. Once the rules have been notified, the banks would be bound to exchange information of accountholders under the said provisions of the law.
The FBR rules have also highlighted the international guidelines and commentaries. For illustration, interpretation and implementation of rules, guidance shall also be sought from commentaries on the Model Competent Authority Agreement and common reporting standard as developed by the Organisation for Economic Cooperation and Development (OECD) as amended from time to time. Following table may be referred to for cross-referencing to the commentary of OECD.
According to the FBR, the relevant rules would be applicable for reporting financial institutions to provide information to the FBR for the purposes of section 107 read with section165B of the Income Tax Ordinance, 2001. The section 107 deals with agreements for avoidance of double taxation and prevention of fiscal evasion and section 165B deals with furnishing of information by financial institutions including banks.
The FBR rules have also specified general reporting requirements for financial institutions to report the specified information with respect to each reportable account of such reporting financial institution to the FBR including name, address, jurisdiction of residence, TIN and other information.
Reporting financial institutions may apply the due diligence procedures for new accounts to pre-existing accounts and the due diligence procedures for high value accounts to lower value accounts. Where new account due diligence procedures are used for preexisting accounts, the rules otherwise applicable to preexisting accounts shall continue to be applied, the rules said.
The FBR has also laid down enhanced review procedures with respect to high value accounts, the rules added. The FBR has also specified the due diligence procedures for preexisting individual accounts under the rules.