A useless 30 billion dollar treasury
Pakistan received $35 billion worth of information from the Organization for Economic Co-operation and Development (OECD) and nearly $30 billion was found to be unrealisable following complaints of misuse of data by the tax authorities.
Sources told The Express Tribune that in some cases where the information had no tax value for some reason, some Pakistani account holders faced unnecessary pressure from tax officials.
After the OECD started sharing information in 2018, Pakistani authorities received $35 billion worth of information, the sources said.
The function of the Federal Revenue Board (FBR) is limited to the proper collection of taxes due on the amount giving rise to the action at the prevailing rates.
The $30 billion of information, or 86% of the total, was useless for tax collection purposes due to double reporting of accounts ($13 billion), the non-resident status of these Pakistanis ($2 billion), immunity granted under tax amnesty programs ($5 billion), or information already disclosed in tax returns filed with the FBR (nearly $2 billion ). An additional $4 billion had also been reported in previous years.
The net actionable information was $5 billion in the case of more than 4,000 accounts and the work of the FBR was limited to tax collection alone, not the amount of accounts, the sources added.
Of this sum, the FBR has so far taken action in cases worth $3.3 billion and work on the remaining information is ongoing.
Of the $5 billion worth of actionable information, almost half related to the year 2020-21, the sources said.
Former Prime Minister Imran Khan promised to recover $200 billion in looted money. But during his time, the Directorate General of International Taxes remained a neglected wing of the FBR, which had no permanent director general.
The previous government declared the “recovery of assets hidden abroad” a priority and also created the Asset Recovery Unit, which eventually became a problem for the previous government.
There are allegations that the former FBR leadership illegally shared OECD information with the government, which is being used against a sitting Supreme Court judge.
According to OECD protocols, OECD information can only be used for the collection of taxes due.
The FBR has encountered many problems in administering OECD information, which has also led to harassment of offshore account holders, said former FBR chairman Shabbar Zaidi.
He said that in many cases account holders were not required to share the information with the FBR due to their non-resident status.
The FBR data showed that the OECD shared about $2 billion of information on more than 4,000 non-resident accounts, which had no tax value for the FBR.
Shabbar Zaidi said that taxpayers also face problems at the hands of the FBR due to the lack of understanding of the tax authorities on complex issues such as the status of foreign trusts, declarations made by the settlor or beneficiary of accounts and the differences in reporting times of returns made by taxpayers and information shared by the OECD.
The FBR dossier showed that the OECD shared the information of 6,000 accounts with $5 billion that have already been declared by taxpayers under the offshore tax amnesty programs.
There were also issues of unethical practices, which “I had raised with former finance minister Shaukat Tarin who immediately took action,” Zaidi said.
Sources with direct knowledge of the cases said that some FBR officials tried to extort money from some of these offshore account holders whose information was shared by the OECD, but they were not required to. pay taxes.
In one case, a family member who was a non-resident received tax notices while his other family members who were Pakistani residents remained untouched, the sources said.
Due to complaints of “embezzlement with corrupt motives”, the Federal Tax Ombudsman’s Office (FTO) had also taken a suo motu opinion and launched an investigation to determine why the three FBR field offices were unable to to take full advantage of OECD information.
Pakistan had received the first batch of information from the OECD in September 2018 – a month after the PTI came to power – but the deal was signed during the Pakistan Muslim League-Nawaz (PML-N) government’s tenure. ).
In 2018, the FBR had received approximately $9 billion in information, but actionable information was only $1.6 billion.
Published in L’Express Tribune, May 10and2022.
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