FBR is Considering Revising Laws to Properly Tax Foreign Assets and Accounts
Posted by AITZAZ HASSAN
Federal Board of Revenue is looking to amend the tax laws through the Finance Bill 2018. The purpose of these amendments is to review and revise the time limitation on reopening tax assessments and introduce a disclosure clause that will require Pakistani residents to disclose their foreign assets.
FBR’s suggestions about these amendments has been mentioned in the report submitted to Supreme Court in a suo moto case regarding foreign assets of Pakistani nationals. FBR told the court that the board couldn’t get the desired results despite the efforts. The reason behind this is the limitation of these tax laws.
Foreign Assets and Supreme Court
Supreme Court took notice of the matter involving foreign accounts of Pakistanis after Panama Leaks and told FBR to take action on it. FBR said that they took the necessary steps to bring back money from foreign accounts that went untaxed however couldn’t get optimum results due to the outdated laws. FBR says that this problem will be solved in the upcoming tax bill of 2018.
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Overall, as per FBR main reasons behind lack of results are as follow;
- Time limitation to reopen an old tax assessment of an account.
- The absence of laws that require the nationals to disclose their foreign assets.
- Treaties or legal systems requiring other countries to share information about these accounts with Pakistan are absent as well.
First two problems can be solved by amending local tax laws. The third problem has somewhat been solved by signing tax convention treaties with other countries. Through this, information between countries can be exchanged.
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An example of such agreement between countries is OECD-Organization for Economic Co-operation and Development. Under this treaty, information can be shared between countries however confidentiality of this information cannot be compromised. FBR has told that it will commence automatic exchange of information under OCED program without compromising the confidentiality.
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