ISLAMABAD: Federal Board of Revenue (FBR) has inclined to take a number of measures to ascertain the situation emerged out of offshore companies and levy/ recover tax on the companies / investment concealed by Pakistani residents.
As first step, FBR has to obtain information and documentary evidence about the investment or income of the offshore companies of Pakistani residents. These recommendations have been worked out in the wake of situation arisen out of scenario on international economic fronts due to Panama Leaks.
The information can be obtained through a number of ways” a well-placed source at FBR told Customs Today here on Wednesday.
In case Pakistan has signed the avoidance of Double Taxation Agreement (ADTA) with the country of jurisdiction, where offshore company is located, FBR may seek information from its tax authorities under the relevant provisions of exchange of information (Article 26) of the ADTA.
In case no such agreement is in place, the concerned filed office of FBR may seek the information under 176 of the Income Tax Ordinance 2001 from the Pakistani national and /or any other third party in Pakistan from whom such information can be obtained.
Information received in the aforementioned manner is across-matched with database of FBR and the taxpayers’ record.
In case the person has filed the return and the information matches with the declared particulars of income, no other action is taken.
In case no record of the person is available, with FBR, the person is issued notice under section 114 of the Income Tax Ordinance 2001 to file his income tax returns.
In response thereto, if the person provides complete documentary evidence that the person is non-resident for tax purposes, no further action is taken under the income tax law.
In case of resident persons, however, all the related provisions of the income tax ordinance and applied.
In case return has been filed but the offshore investment or income, as the case my be, has not been declared by the person, the taxpayer will be issued a show cause notice to explain the sources of investment and income derived there from, including any other details/documentary evidence as are necessary.
As a result of proceedings, if any evasion of tax is detected the relevant provisions of the law are applied accordingly to retrieve the loss of state revenue.
