The government has granted powers to Commissioner Inland Revenue at the Federal Board of Revenue (FBR) to issue assessment order of past ten years on discovery of undisclosed offshore assets.
This move comes as a result of the insertion of a new sub-section (1A) into Section 123 of the Income Tax Ordinance, 2001, through the Finance Supplementary (Second Amendment) Bill of 2019, which was presented in the National Assembly on Wednesday.
The newly introduced sub-section (1A) expands the powers of the Commissioner of Inland Revenue to address situations where previously undeclared offshore assets are uncovered. This provision aims to enhance the government’s ability to combat tax evasion and ensure that individuals are held accountable for assets held in offshore accounts.
According to the new sub-section:
“(1A) Where an offshore asset of any person, not declared earlier, is discovered by the Commissioner or any department or agency of the federal government or a provincial government, the Commissioner may, at any time before issuing any assessment order under section 121 or an amended assessment order under section 122, issue to the person a provisional assessment order or provisional amended assessment order, as the case may be, for the last completed tax year of the person, taking into account the offshore asset discovered.”
The introduction of this sub-section represents a significant enhancement of the government’s powers to address tax evasion related to undisclosed offshore assets. The provision empowers the Commissioner to issue provisional assessment orders when offshore assets that were not declared in previous tax filings are discovered.
Key points regarding this development include:
Enhanced Accountability: The provision is aimed at improving accountability for undisclosed offshore assets. Taxpayers with such assets will be subject to closer scrutiny and assessment to ensure compliance with tax laws.
Time Frame: The Commissioner is granted the authority to assess undisclosed offshore assets for up to ten past tax years, providing a substantial window for addressing potentially undisclosed income and assets.
Provisional Assessment: The provision allows for the issuance of provisional assessment orders, which means taxpayers will be required to undergo assessments for the last completed tax year. These assessments will take into account the offshore assets discovered.
Discovery Mechanism: The offshore assets can be discovered by the Commissioner, any department, or agency of the federal government, or a provincial government. This allows for a broader scope of investigation and potential discovery of offshore assets.
The new sub-section is expected to play a vital role in the government’s ongoing efforts to combat tax evasion and increase transparency in financial matters. By allowing assessments of undisclosed offshore assets for up to ten past tax years, the government aims to close the accountability gap and ensure that individuals accurately report their income and assets, both domestic and offshore.
However, it is essential to note that the application of this provision will require careful consideration and monitoring to ensure that the process is carried out fairly and in accordance with the law. The government will likely develop procedures and guidelines to govern the assessment of previously undisclosed offshore assets.
The introduction of sub-section (1A) to Section 123 of the Income Tax Ordinance, 2001, empowers the Commissioner of Inland Revenue to assess previously undisclosed offshore assets for up to ten past tax years. This is a significant step towards enhancing tax compliance and increasing transparency in financial matters. It reflects the government’s commitment to addressing tax evasion and ensuring that individuals are held accountable for their offshore assets and income.