ISLAMABAD – The Federal Board of Revenue (FBR) has announced a significant move to enhance its authority in dealing with undisclosed offshore assets, as outlined in the proposals of the Finance Supplementary (Second Amendment) Bill, 2019.
The amendment is designed to empower the revenue authority in taking swift and effective measures against individuals holding undisclosed offshore assets.
In an official statement issued on Monday, the FBR highlighted that it currently possesses the power, under Section 123 of the Income Tax Ordinance, to immediately demand and effect recovery on a provisional basis when local assets are confiscated by the government. The proposed amendment aims to extend the scope of this section to cover the discovery of undeclared offshore assets.
“The demand and recovery of tax on such persons can now be executed immediately after the receipt of information in suitable cases,” stated the FBR. This move is deemed necessary to enable the FBR to provisionally recover taxes before funds are moved out of bank accounts, allowing regular proceedings that typically take one to two years to follow.
The FBR clarified that it has the capability to seek assistance in recovering taxes from foreign jurisdictions where bilateral and multilateral agreements exist. This provision ensures that the FBR can request the freezing of offshore accounts in other countries by conveying tax demands to the relevant authorities.
The revenue body already possesses information on bank accounts held by Pakistanis in 26 countries. The proposed amendment is expected to facilitate the FBR in swiftly pursuing individuals involved in the possession of undisclosed offshore assets.
Inserted through the Finance Supplementary (Second Amendment) Bill, 2019, a new sub-section (1A) has been added to Section 123 of the Income Tax Ordinance, 2001. According to the new sub-section, “Where an offshore asset of any person, not declared earlier, is discovered… the Commissioner may issue to the person a provisional assessment order… taking into account the offshore asset discovered.”
This legislative move represents an additional tool in the FBR’s arsenal, complementing existing measures in the Income Tax laws, Anti-Money Laundering Act, and FIA/NAB laws. The FBR emphasized that this amendment does not preclude or overlap with the jurisdiction of existing laws and institutions. The proposed measures aim to fortify the FBR’s ability to tackle tax evasion related to offshore assets swiftly and effectively.
