ISLAMABAD: The top taxation authority has expressed inability to investigate owners of offshore companies citing legal restrictions to probe tax accounts beyond six years for tax filers and five years for tax evaders.
Prior to 2010, the Federal Board of Revenue (FBR) was empowered to go beyond the period to investigate tax records.
While briefing the Senate’s Standing Committee on Finance, FBR Inland Revenue Policy member Rehmatullah Khan Wazir said the authority had no power to open cases of tax filers and non-filers beyond six and five years, respectively.
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On the issue of probing offshore companies, he said the FBR could not probe or tax them as most of the holdings reported by Panama Papers were formed before 2010.
Wazir said the global income of only a Pakistani resident was taxable inside the country. Under the income tax laws, he added, the residency status was more important than nationality.
When asked about tracking records and tax data of offshore companies, the FBR officer said the authority in collaboration with NADRA could access the data by using the CNIC numbers.
However, on a specific query on how many years the FBR can go back for analysing tax records, he replied the taxation body had been keeping electronic records since 2004-2005. But, he added, it would be difficult to access earlier manual records.
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Senator Kamil Ali Agha also questioned the rationale behind changing the law in 2010 about probing tax record. Parliament had amended the income tax laws in 2010 probably after taxpayers demanded not probing their records for 10 years.
Later, the Senate committee decided an independent meeting would be held on the issue of offshore companies.
Published in The Express Tribune, May 11th, 2016.
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