The Federal Board of Revenue (FBR) Tuesday expanded the scope of powers of Director General of International Taxes Operations to enforce return filing, make assessments, seek automatic exchange of information from other countries and obtain information of taxpayers solicited by another country under tax treaty, tax information exchange agreement or multilateral convention.
The FBR has issued SRO 744(I)/2019 here on Tuesday to confer upon the officers of the Directorate General of International Tax Operations, the powers of the authorities to exercise powers and perform functions under the provisions of the Income Tax Ordinance 2001. The Directorate General of International Operations has already become fully operational for the imposition and recovery of taxes from undisclosed offshore assets and income held by Pakistanis abroad and to interact directly with foreign tax jurisdictions for exchange of information.
A seasoned tax official having global experience of tax laws, Chief International Taxes FBR Muhammad Ashfaq Ahmad is working as Director General of the Directorate General of International Operations. The Director General of International Taxes Operations would have the jurisdiction over persons or classes of persons carrying on business or residing in areas, within the territorial jurisdiction of Pakistan.
The FBR has also authorised Directors of International Tax Operations, Additional Director of International Tax Operations and Assistant/Deputy Director of International Tax Operations of Karachi, Islamabad, Lahore, Peshawar, Multan and Quetta to exercise certain powers of the Income Tax Ordinance 2001.
The Director General of International Taxes Operations may enter into a tax treaty, a tax information exchange agreement, a multilateral convention, an inter-governmental agreement or similar agreement or mechanism for the avoidance of double taxation or for the exchange of information for the prevention of fiscal evasion or avoidance of taxes including automatic exchange of information with respect to taxes on income imposed under Income Tax Ordinance or any other law for the time being in force and under the corresponding laws in force in that country.
The Director General of International Taxes Operations shall have the powers to obtain and collect information solicited by another country under a tax treaty, a tax information exchange agreement, a multilateral convention, an inter-governmental agreement, a similar arrangement or mechanism.
The Director General of International Taxes Operations would be empowered to exercise anti-avoidance provisions under the Chapter VIII of Income Tax Ordinance 2001. The Director General of International Taxes Operations would have the authority to deal with the controlled foreign companies. He can exercise powers pertaining to the unexplained income or assets and liability in respect of certain security transactions.
The Director General of International Taxes Operations would be empowered to enforce filing of returns and making or amending assessments under the Chapter X of the Income Tax Ordinance 2001. He would be empowered to delegate to any officer of Inland Revenue, subordinate to the Commissioner all or any of the powers or functions conferred upon or assigned to the Commissioner under this Ordinance, other than the power of delegation.
The Director General of International Taxes Operations may, in respect of any transaction between persons who are associates, distribute, apportion or allocate income, deductions or tax credits between the persons as is necessary to reflect the income that the persons would have realised in an arm's length transaction. In making any adjustment, the DG may determine the source of income and the nature of any payment or loss as revenue, capital or otherwise.
The Director General of International Taxes Operations would be empowered to exercise powers for recharacterisation of income and deductions. For the purposes of determining liability to tax, the DG may recharacterise a transaction or an element of a transaction that was entered into as part of a tax avoidance scheme; disregard a transaction that does not have substantial economic effect; or recharacterise a transaction where the form of the transaction does not reflect the substance.
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