Federal Cabinet has allowed the Federal Board of Revenue (FBR) to exchange taxpayers'' information at the global level for tracking down capital flown out of the country as a result of tax evasion or corruption, official sources told Business Recorder. On January 27, 2014, Cabinet was informed that the multilateral convention on administrative assistance in tax matters facilitates international co-operation for better enforcement of national tax laws, respecting fundamental rights of taxpayers.
The co-operation under the Convention ranges from an exchange of tax information to assistance for recovery of outstanding tax claims. The sources said, the Convention developed jointly by the Council of Europe (CoE) and the Organisation for Economic Co-operation and Development (OECD) was opened for the member states of both the organisations in January, 1998. In April 2009 the G20 called for an international action. As a result, countries were scrambled to become signatories to the Convention. Some of the important neighbouring countries like India are at an advanced stage of signing the Convention.
According to sources, FBR is of the view that the future dynamics of international co-operation are heavily loaded in favour of Pakistan''s joining the Convention, as Pakistan, among others, would derive the following benefits:-. (i) track down capital which is flown out of the country as a result of tax evasion or corruption;(ii) tighten the noose around international corporations which operate in Pakistan and successfully weave corporate webs taking advantage of iron curtains existing between countries and ;(iii) save resources in terms of negotiations and ratifications of bilateral tax treaties. After giving the background of the pact, FBR proposed that Pakistan should join the Multilateral Convention on Mutual Administrative Assistance in tax Matters. The price tag attached with the initiative in terms of annual fee is approximately $20,000.
In September last year, Prime Minister Nawaz Sharif''''s cabinet had allowed FBR to renegotiate Avoidance of Double Taxation Agreement (DTA) with Switzerland aimed at tracking billions of dollars black money parked by Pakistani tycoons in that country.
The cabinet had been informed in September that amid a global squeeze on tax evasion, money laundering and blatant outflows of capital, Switzerland with $7 trillion stashed in its 11 largest banks, out of the world''s total off-shore liquidity stock of $32 trillion, is the prime target of international efforts geared to dismantle "the evil empire of banking secrecy anywhere and everywhere in all forms and manifestation". Switzerland, traditionally has been the oldest, the most formidable, and the most popular secrecy jurisdiction attracting massive sums of tax evaded money from across the world into its numbered-account maintaining banks.