Treaties likely on exchange of tax information
ISLAMABAD: Several amendments have been proposed to the tax laws in the Finance Bill 2015-16 to empower the federal government to enter into agreements for exchange of tax-related information with provinces and other countries.
The new sections proposed to be inserted in the Finance Bill will empower Islamabad to enter bilateral or multilateral agreements for exchange of information, including electronic exchange of information.
This amendment will also empower FBR to obtain and collect information, when requested by another country under the proposed tax treaties as well.
The decision of the government has been prompted by recent global initiatives, led by the US towards information sharing and exchange for combating tax-evasion and avoidance.
The US has started foreign account tax compliance act (FATCA) under which foreign financial institutions and other financial intermediaries are required to disclose information for preventing tax evasion by US citizens and residents through offshore accounts.
Going by the new trends, the bill proposes new powers for striking tax related treaties with foreign countries. The information received under the proposed amendments may be used only for tax and related purposes and is required to be kept confidential.
The Finance Bill also proposes powers for Commissioner of Income Tax to inquire any person to furnish any information required by any foreign government under any agreement.
Analysts believed that tax officials will use the amendments for seeking information about Pakistani citizens and residents having assets outside Pakistan.
The National Accountability Bureau (NAB) has estimated an amount of $45 billion assets of Pakistanis in foreign countries banks.
Section 56A, Section 56C, Section 72D are also proposed to be inserted through the Finance Bill towards documentation of economy and increase the tax net.
Section 56C proposes to provide for empowering FBR to introduce prize scheme for general public on purchases from registered person. Proposed section 72D provides for rewards for whistle blowers.
It has also been proposed that any such information received or supplied shall be confidential, notwithstanding the provisions of the Freedom of Information Ordinance, 2002 (XCVI of 2002) and shall be subject to sub-section (3) of section 216, which requires public servants to maintain confidentiality of information.
