ISLAMABAD: Federal Board of Revenue Member (Inland Revenue Policy) Rehmatullah Wazir has said that the commercial banks are not allowing the tax authority to scrutinise foreign currency accounts despite a law, which gives the FBR access to these accounts.
The Member revealed this during a meeting of the Senate Standing Committee on Finance, while responding to Senator Saleem Mandviwalla’s question whether the FBR could access these accounts to probe tax evasion.
However, a senior official of the State Bank of Pakistan told the committee that there were 535,000 individual foreign currency accounts with $6.5 billion in deposits.
FBR Chairman Nisar Muhammad Khan insisted that if the FBR had definite information about tax evasion, it could hold investigations into the foreign currency accounts – an assertion that was far from reality. He could not cite a single case where the FBR got information from the banks over the last 18 years.
Finance Secretary Dr Waqar Masood said the government had introduced an amendment to the Income Tax Ordinance of 2001 to bind the banks to give access to local currency accounts to the FBR. However, the banks had challenged the law in courts.
Mandviwalla has proposed amendments to Sections 4 and 5. Under Section 4, he proposed that only authorised dealers, foreign branches of Pakistani banks, shipping companies, airlines, insurance corporations incorporated in Pakistan and their subsidiaries, students, exporters and foreign visitors could open these accounts. He suggested that all other individuals and entities should not hold foreign currency accounts, as these had become a main source of money transfer abroad and tax dodging.
