The government said on Thursday that it is facing difficulty in getting access to actionable bank account information of Pakistani tax residents allegedly hiding behind Iqama (work permit).
This was disclosed by Chairman Federal Board of Revenue (FBR) Shabbar Zaidi during a meeting of Finance Committee of the National Assembly, presided over by Asad Umar. Zaidi added that the United Arab Emirates (UAE) is not giving access to actionable bank account information about Pakistani tax-residents who are purportedly hiding behind the UAE Iqama-based residential status.
"The UAE is a serious problem and is not giving data to Pakistan," he said and added the UAE authorities interpret Iqma holders as residents and do not provide access to their data. "Our interpretation is that Iqma is not residency but a work permit," he added. Zaidi further said, "We wrote a letter to the Organization for Economic Cooperation and Development (OECD) whose response was that it does not agree with the UAE interpretation of Iqama and would pursue the matter."
Asad Umar and Aysha Ghaus Pasha deplored that the government is unable to recover full tax on illegally parked money in foreign banks owing to amnesty schemes offered by the successive governments, after the meeting was told by the tax authorities that Rs 1 billion tax was recovered from money laundering of $5.5 billion because of amnesty schemes offered in 2018 and 2019. The meeting was further told that tax authorities could have imposed 35 percent tax and 35 percent penalty on $5.5 billion.
The tax authorities told the committee that data received of undeclared accounts under automatic exchange of information from OECD was of 325 cases having over $1 million amount each as on October 31, 2019. Of the total 325 cases, Rs 62.335 billion was whitened in 135 cases through tax amnesty scheme in 2018 and Rs 31.7 billion was whitened in 56 cases in 2019 amnesty scheme.
The total tax paid to the government was Rs 2.819 billion in 2018 and Rs 1.694 billion in 2019. Finance committee was informed that in total 115 cases were assessed with tax imposition of Rs 4.063 billion and Rs 1.002 billion was recovered against the imposed tax. There are 10 cases under proceedings, the committee was told.
The committee was further informed that Common Reporting Standard (CRS) data is expected from 19 more jurisdictions, apart from data from 45 countries which has already been received. Pakistan has also transmitted data to 55 jurisdictions and the OECD team is also helping Pakistan and other jurisdictions in handling different issues related to this data, he added. The committee expressed dissatisfaction on the performance of the FBR with regard to recovery under OECD.
Minister for Economic Affairs Hammad Azhar said that Pakistan faces greater FATF challenges than other countries because of its risk profile, and completion of one action plan does not mean that the country would be out of grey list. He said that Pakistan's foremost priority is to complete 27-point action plan of International Cooperation Review Group (ICRG). He said that Pakistan was compliant, partially compliant and largely compliant on 22 action points and was non-complaint on five action points of ICGR. He said that Pakistan would submit initial report in December followed by second report on January 7, 2020 which would be put up before the FATF plenary in the end of January to be taken up by mid-February 2020. "We want to complete the ICRG action plan by 2020," he added. He said that substantial progress has been made and terror financing activities are now being identified but the conviction remains a challenge.
The members expressed concerns and said that compliance with the FATF action plan is very critical for the country's financial system. Pakistan would be unable to launch bonds in the international market to meet repayment liabilities if it is fallen in black list, said Pakistan Muslim League (Nawaz) lawmakers Qaisar Ahmed Sheikh and Aysha Ghaus Pasha.
The finance committee was informed that plenary meeting of the FATF held in Paris on October 13-18, 2019 was updated by Pakistani delegation on progress made on FATF 27 points Action Plan covering period from July 2018 to September 2019. The FATF plenary board accepted completion of five (5) action items and extended implementation period for the remaining 22 action items till February 2020, keeping Pakistan in grey list.
The meeting was informed that a recent meeting of National FATF Coordination Committee on October 24, 2019, presided over by Hammad Azhar, finalized a strategy for the next FATF meeting.
Comments
Comments are closed.