Following signing a multilateral convention to check tax evaders, Pakistan has expressed its willingness to sign Organisation for Economic Co-operation and Development (OECD) convention with 40 countries on anti-bribery, enabling authorities to exchange information related to kickbacks and receiving of corruption money. This was stated by Finance Minister Ishaq Dar while addressing a seminar organized by the Federal Board of Revenue (FBR) on OECD's multilateral convention on mutual administrative assistance in tax matters here Wednesday.
The Finance Minister said we have shown our willingness to sign anti-bribery convention with OECD multilateral forum on which 40 countries had already signed in order to discourage kickbacks and corruption money from mega projects. The federal cabinet also granted approval for signing bilateral exchange of information with Switzerland on bilateral level.
He said that the OECD's multilateral convention was more beneficial for Pakistan's prospects but the government did not give up bilateral treaty with Switzerland. He said that there was long wish list from Swiss authorities like seeking reduction in tax rates, getting exemptions and other incentives but Pakistan refused to entertain their demands. After meetings, both sides finally agreed for finalising the initial draft of revised agreements.
He observed that the cabinet has granted approval and now we are waiting for Swiss authorities to complete their procedural requirements in this regard. He further highlighted that the government took 32 months to complete procedures for signing OECD's convention on which Pakistan had signed the convention on September 14 this year at Paris. He said the OECD's multilateral convention on tax matters would become operational by end of 2017 or early 2018.
He said that OECD was firm to bring about three dozen tax havens into the fold of multilateral forum as it was the most effective global outfit to go against tax evaders across the globe. He further said that Pakistan would have to make more legal changes into tax laws in order to align with OECD's convention as Transfer Pricing related issues needs to be settled.
Ishaq Dar said that the economy should be decoupled with politics as sit-ins would be causing loss to the national economy. He said that the government was ready to sign OECD's convention on anti bribery as their intention were crystal clear that they did not want to permit kickbacks and corruption related to mega projects.
This convention was already signed by 40 countries and no sovereign countries could allow such practices, he added. He said that the anti bribery convention would be signed during 2017. Ishaq Dar said that Pakistan's foreign currency reserves now stood at $23.4 billion which were around $3 billion when the government came into power in 2013.
He said that there would be $310 million due payment by next week but the reserves position would remain over $23 billion. On the issue of revenue collection of FBR, Ishaq Dar said that the FBR would achieve the assigned revenue collection target of Rs 3621 billion for 2016-17 as the FBR's collection went up by 60 percent in last three years which were used to register growth of just 3 percent few years back.
Addressing the seminar, Special Assistant to Prime Minister on Revenue Haroon Akhtar Khan said that noose was tightening against tax evaders after signing OECD's convention, new Benami law and amended Anti Money Laundering Act, reflecting government commitment to take action against tax evaders. There is a need to clean out past practices and it will be better for business to come and comply with tax laws.
Rather passing through sleepless nights, it is better to clean balance sheets by businessmen, he said. Chairman FBR Nisar Mohammad Khan said that there were 40 tax havens and Panama had not yet signed this multilateral convention for co-operating with them. Panama is not a member of OECD multilateral convention, but there is pressure on Panama to become member of the OECD convention.
He said that the FBR kick-started pilot project in collaboration with UK's tax machinery (HRMC) for placing mechanism for automatic exchange of information under provisions of OECD's multilateral convention on exchange of information on tax matters. We are preparing rules for automatic exchange of information, upgrading Information Technology (IT) and its support system and placing confidentiality and safeguard protocols.
Chairman FBR added that the HRMC, UK team will be visiting Pakistan by November this year while OECD's team will be visiting by January 2017 to discuss automatic exchange of information.
Massod Naqvi, Chairman Tax Reform Commission (TRC) said that there were certain reservation on this treaty including exclusiveness to reserve right to hold up certain information and FBR's capacity for using of information technology against serious tax crimes. Mohsin Nadeem of Pakistan Tax Bar Association also talked about the OECD and Panama Leaks in detail. He was of the view that the OECD is not directly linked with the issue of Panama Leaks. OECD convention is a future arrangement for our future generations so that the events like Panama leaks should not happen in future.