Finance Supplementary (2nd Amendment) Act 2019: Directorate set up for tax recovery from undeclared offshore assets

ISLAMABAD: The federal government has set up Directorate General of International Tax Operations for recovery of tax in undeclared off-shore assets and incomes.

According to Finance Supplementary (Second Amendment) Act, 2019, the directorate has been established under new section 230E of Income Tax Ordinance, 2001.

The new section is as follow:

Section 230E: Directorate General of International Tax Operations:

Sub-Section (1): The Directorate General of International Tax Operations shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Federal Board of Revenue (FBR) may, by notification in the official Gazette, appoint.

Sub-Section (2): The Board may, by notification in the official Gazette,-

(a) specify the functions and jurisdiction of the Director General and its officers; and
(b) confer the powers of authorities specified in Section 207 upon the Directorate General and its officers.

Sub-Section (3): The functions and powers of the Directorate General of International Tax Operations shall include but not limited to –

(a) receive and send information from other jurisdiction under spontaneous, automatic and on demand exchange of information under exchange of information agreements;

(b) levy and recover tax by passing an assessment order under section 123(1A) in case of undeclared off-shore assets and incomes;

(c) receive, transmit and exchange country by country reports to the jurisdictions that are parties to international agreements with Pakistan; and

(d) conduct transfer pricing audit in cases selected for such audit by the Director General of International Tax Operations.

Sub-Section (4): The FBR may, by notification in the official Gazette, specify the criteria for selection of the taxpayer for transfer pricing audit.

Explanation: For the removal of doubt, it is clarified that transfer pricing audit refers to the audit for determination of transfer price at arm’s length in transactions between associates and is independent of audit under Section 177 and 214C which is audit of the income tax affairs of the taxpayer.

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