FBR chief warns insurance companies to take ‘corrective actions’ or face consequences

• Syed Shabbar Zaidi said corrective actions are earnestly desired to avoid penal and adverse consequences.
• FBR Chairman seeks complete information of account holders from banks.

Federal Board of Revenue (FBR) Chairman Syed Shabbar Zaidi has warned insurance companies not strictly making withholding commission payments to insurance agents, saying that the companies should take ‘corrective actions’ in order to avoid adverse consequences.

“FBR has observed that withholding on commission payments to insurance agents are not being made strictly as required under the law by some insurance companies. Corrective actions are earnestly desired to avoid penal and adverse consequences,” said the FBR Chairman in a tweet.

FBR has observed that withholding on commission payments to insurance agents are not being made strictly as required under the law by some insurance companies. Corrective actions are earnestly desired to avoid penal and adverse consequences.

— Syed Shabbar Zaidi (@ShabarZaidi) 31 October 2019

In another tweet, Zaidi reaffirmed FBR’s position on the case of ‘Bond Washing’ for T-Bills saying that there is no issue banking secrecy law in this respect.

“FBR reiterates its query relating to cases of ‘Bond Washing’ for T-Bills under trust to avoid deduction of withholding and strongly reaffirms its position that there is no issue banking secrecy law in this respect. Banks are suggested to divulge such information soon,” said the FBR Chairman in a tweet.

FBR reiterates its query relating to cases of ‘Bond Washing’ for T-Bills under trust to avoid deduction of withholding and strongly reaffirms its position that there is no issue banking secrecy law in this respect. Banks are suggested to divulge such information soon.

— Syed Shabbar Zaidi (@ShabarZaidi) 31 October 2019

Just days ago, Zaidi issued a letter to the Heads of all banks stating that bank’s role is to act as a trustee/ custodian on behalf of the various customers for the acquisition of T-Bills, PIBs etc. No information in this respect has been received so far.

The letter added that this reminder letter is being written for the reason that FBR is obliged to ensure in order to comply with various regulatory requirements including those inducted by FATF that there is proper compliance of various regulatory environments. There are indications in various cases, especially being those related to individuals that the amount held under these accounts are not appropriately disclosed in the individual personal income tax returns.

Chairman FBR further stated that there are instances of ‘Bond Washing’ whereby the ‘interest accrued’ is transposed as capital gain to avoid withholding requirement on interest where State Bank of Pakistan is to act as withholding agent.