Minister of State for Revenue Muhammad Hammad Azhar said on Thursday that the government is seeking foreign bank accounts data of Pakistanis from 10 more foreign tax jurisdictions including Switzerland under the Organisation for Economic Cooperation and Development (OECD) arrangement. To a query on Pak-Swiss treaty on avoidance of double taxation at a press conference held at the Press Information Department (PID), Hammad Azhar stated that Pakistan has made formal requests to 10 more countries under an OECD mechanism as well as Switzerland separately for exchange of information about those Pakistanis who have concealed their assets and bank accounts abroad to evade taxes.
Hammad said, "We have made requests to 10 more countries for getting automatic exchange of information as so far we have received details about 150,000 bank accounts from 29 jurisdictions under Organisation for Economic Cooperation and Development (OECD) treaty. We have also made another request to Switzerland for sharing of exchange of information in January (last month) and they are willing to share data but so far it has not yet been operationalised".
The Swiss government is cooperating with the Pakistani tax authorities and Federal Board of Revenue (FBR) has already ratified the convention on the avoidance of double taxation between the two countries.
The FBR is in the process of profiling of 150,000 foreign bank accounts purportedly owned by Pakistani nationals abroad. "We have received information through OECD network from 29 countries participating in OECD exchange of information network. We are profiling the amount and other details of these foreign bank accounts," he said.
He said that the credit goes to the government of PTI which has introduced the concept of provisional assessment of offshore assets. The amendment in the law was proposed to enable tax authorities for taking speedy action on the information before the money is shifted from those accounts. He said that the FBR has established six dedicated Commissionerates as they are doing profiling of received information out of 150,000 account holders from 29 jurisdictions under the OECD.
He said that the government proposed provisional assessment of owners of offshore assets through reform bill introduced in the Parliament in a bid to foil attempts for moving out of assets or money due to routine lengthy process of conducting assessments. Though the OECD treaty was done in the tenure of the last regime, the PTI placed required procedures for ensuring exchange of information after coming into power. Sharing some of the major reforms in the tax machinery, he said that the FBR's Internal Audit Wing has been proposed to be directly reporting to the Prime Minister Office to ensure transparency within the tax machinery under the anti-corruption drive of the FBR. The government has also decided to make Internal Audit Wing of the FBR autonomous.
Another reform initiative is the proposal to separate assessment from audit. It has been proposed that the tax official engaged in issuance of assessment order to the taxpayers should not be allowed to do the audit of the same taxpayer. The assessment and audit should be done by two different taxation officers to control corruption in the tax machinery. The computerised generated system of assessment and audit should be in place, said the minister.
He said that the government has accelerated drive against the high-net worth individuals. The FBR chairman had transferred and posted FBR Members and Chief Commissioners in the field formations having good reputation to make FBR clean and a performance-based organisation. A workable plan for improving capacity building of the FBR officers would be presented by the FBR chairman. "The FBR has to effectively use the technology, as only increase in the number of workforce would not be appropriate," he remarked.
Under the tax policy, Hammad Azhar stated, the government is focusing on clubbing all federal taxes into one tax. "We are seriously moving towards clubbing of all federal taxes. Then provinces would be convinced for clubbing provincial and federal taxes at the forum of Council of Common Interests (CCI) in a bid to ensure ease of doing business in Pakistan," he added.
Asked about the shortfall of Rs 190 billion in revenue collection during July-January (2018-19), he said the several factors are responsible for this decrease in collection. The government has not increased sales tax on petroleum products as much as high to 52 percent done by the previous government. "We are only charging standard rate of 17 percent sales tax." The FBR is losing around Rs 90-100 billion on account of taxes from telecom sector. A total of 40 percent of the FBR taxes come from the import stage. The gradual decrease in imports would also result in decrease in taxes collected at the import stage, he added.
"We had not suffered any revenue shortfall if we had increased taxes on petroleum products, like past government, and withdrawn ban on purchase of immovable properties and vehicles by non-filers," said the minister. To a question, he said that the government would not take new tax measures in the remaining period of 2018-19, but would intensify enforcement for increase in revenue collection during the fiscal year.
The government has decided to submit a new formula on taxation of telecom sector to the Supreme Court of Pakistan which hopefully would be acceptable. In this regard, he further said, the FBR is going to propose something new before the judges of Supreme Court of Pakistan on the next hearing for restoration of tax on telecom sector as the apex court of the country had suspended collection of withholding tax on mobile phone usage. "We are making efforts to table such a proposal before the SC that might pave the way for restoration of some kind of tax on telecom sector," he added. For the first time, the change in the mindset of the FBR is evident from the fact that the economic reform package contains relief measures for ease of doing business instead of taxation measures, he said.