In order to probe cases of offshore companies abroad, the Federal Board of Revenue (FBR) has authorized its Commissioners, Inland Revenue, Automatic Exchange of Information (AEOI) Zones, to obtain information about the non-resident Pakistanis from financial institutions including banks.
A notification issued by the FBR on Monday revealed that the Board has allowed the Commissioners, Inland Revenue, Automatic Exchange of Information (AEOI) Zones Karachi, Lahore, and Islamabad to obtain the data and seek details of financial accounts and sources of investments, etc., of reported persons under Multilateral Competent Authority Agreements with other tax jurisdictions or from OECD (Organization of Economic Cooperation and Development) member countries.
According to the notification, the Commissioner Inland Revenue will exercise the powers and perform functions as conferred under section 108, 165B of the Income Tax Ordinance and section 182 (1A), (7), (17), (25), (26), (27) & (28) of the Income Tax Ordinance 2001.
The Commissioners have the authority to exercise powers under section 108 (transactions between associates) of the Income Tax Ordinance 2001. The Commissioners, in respect of any transaction between persons who are associates, may distribute, apportion or allocate income, deductions, or tax credits between the persons as is necessary to reflect the income that the persons would have realized in an arm’s length transaction.
The Commissioners will exercise the powers under section 165B (furnishing of information by financial institutions including banks).
Every financial institution will make arrangements to provide information regarding non-resident or any other reportable persons to FBR in a prescribed form and manner for the purpose of automatic exchange of information under a bilateral agreement or multilateral convention.
The Commissioners would also impose penalties where a Reporting Financial Institution fails to comply with any provisions of section 165B of the Ordinance or Common Reporting Standard Rules in Chapter XIIA of Income Tax Rules, 2002. Such Reporting Financial Institution will pay a penalty of Rs. 10,000 for each default and an additional Rs. 10,000 each month until the default is redressed.
If a Reporting Financial Institution files an incomplete or inaccurate report under provisions of section 165B of the Ordinance and Common Reporting Standard Rules in Chapter XIIA of Income Tax Rules, 2002, it will pay a penalty of Rs.10,000 for each default and an additional Rs. 10,000 each month until the default is redressed.
If a Reporting Financial Institution fails to obtain valid self-certification for new accounts or furnishes false self-certification for new accounts or furnishes false self-certification made by the Reportable Jurisdiction Person under Common Reporting Standard Rules in Chapter XIIA of Income Tax Rules, 2002, it will pay a penalty of Rs. 10,000 for each default and an additional Rs. 10,000 each month until the default is redressed.Â
