KARACHI: The Federal Board of Revenue (FBR) will begin probe into the money trails of 500 high net-worth Pakistani individuals and companies having properties in the UK from August 1 (today) to discover their ‘probable’ tax evasion as an amnesty scheme for concealed local and foreign assets expired on Tuesday, officials said.
The officials said the FBR will conduct scrutiny of assets held by Pakistanis in the UK.
A pilot run of exchange of information with the UK tax authorities was launched early this month and the FBR obtained information of 500 Pakistanis under a tax treaty.
The officials said around 90 percent of 500 Pakistanis are individuals and remaining are association of persons and corporate entities. Most of them have not declared their foreign assets to the local tax authorities.
“The FBR will issue notices to residential address in Pakistan of identified persons from August 1 and will give them opportunity of being heard,” an official at the FBR said. The FBR will initiate legal proceedings against those who fail to provide money trails.
In September 2016, Pakistan signed the Convention on Mutual Administrative Assistance in Tax Matters of the Organisation of Economic Cooperation and Development (OECD), which paved the way for the exchange of information related to offshore accounts and immovable properties.
Tax officials said the country has been qualified to seek financial information from OECD treaty’s signatories since January. Automatic information exchange will, however, begin from September.
The officials said the FBR was waiting for the end of tax amnesty scheme that allowed individuals to declare their concealed local and foreign assets with two to five percent of tax payments. The three-month amnesty was expired on July 31. It was announced in April and its deadline was extended by one month in June.
“The government had no intention to extend deadline of the amnesty scheme any further,” an official said.
FBR officials said hunt for tax evaders would not be confined to UK alone and the tax authorities have also obtained financial data of Pakistanis having assets and invested in Dubai real estate market. The official said the details would be divulged in times to come.
An official said the latest action against UK’s asset owners was initiated on the basis of exchange of information under avoidance of double taxation treaty and OECD treaty. “Under the OECD Pakistan will get information from member countries by September 30 and action will be taken from October onwards.”
Officials said an amendment has been introduced through Finance Act 2018 to empower FBR to take action against undisclosed foreign assets. The amendment withdrew time limit of five years for investigation and now the FBR can initiate proceedings against the illegal assets discovered anytime in the past 70 years.
Senior officials of FBR said the new government has options to bring back looted money to Pakistan, considering external financing crisis.
FBR officials are anticipating aggressive move of new government, led by Pakistan Tehreek-e-Insaf, which has been very vocal against corruption and plundered wealth before elections.