FBR seeks clarification from Nawaz on receipts of foreign remittances from son

Tax authorities seek clarification on receipts of foreign remittances from premier's son

ISLAMABAD: Tax authorities have served a notice on Prime Minister Nawaz Sharif, seeking a clarification on receipts of foreign remittances from his son and subsequent distribution among his family members.

The notice was sent on April 8 by the Federal Board of Revenue’s audit unit one, zone-III of the Regional Tax Office in Lahore, said sources in the regional office. The notice was served under Section 176 of the Income Tax Ordinance 2001, which empowers tax officials to seek information about any transaction.



The FBR field office sent the notice just five days after the Panama Papers disclosed that the Sharif family owned offshore companies. Sources said the field office has sought a clarification from the premier about foreign remittances that he received from his son and their onward distribution as gift to his daughter, Maryam Nawaz, and to his son.

It was not clear whether or not the prime minister has responded to the notice. In 2011, the premier received Rs129.3 million foreign remittances from his son and then gifted Rs31.7 million to his daughter and Rs19.45 million to his second son, according to an investigative article published in an English daily on Friday

The article – “Tough Times for PM” – was written by Dr Ikram ul Haq, the country’s top tax expert and Supreme Court’s advocate.  Dr Haq wrote that under the law, there is a procedure to give a gift to someone, which in this case has not been followed. Under the Income Tax law, a commissioner is empowered to send a notice under Section 176 without consulting the FBR headquarters.

Sources said that due to adverse implications of the notice, particularly for the Sharif family members, FBR top officials are now trying to hush the matter up. FBR Chairman Nisar Muhammad Khan was allegedly helping the ruling family to complete the missing documentation, sources claimed.



Despite repeated attempts in the last few days, the FBR chairman did not respond to the question as to whether the bureau has sent a notice to the premier and if tax authorities took any subsequent action. FBR spokesperson Dr Muhammad Iqbal said he was unaware of any such notice. “I cannot confirm whether or not a notice has been sent to Prime Minister Nawaz Sharif,” said Iqbal while talking to The Express Tribune. He also refused to give further comment on the issue.



Sources said the notice may not carry any adverse implications for the premier but it could create problems for his daughter, Maryam, and her husband, Captian (retd) Muhammad Safdar. The FBR chairman is said to be close to Safdar.

The Section 39 Subsection 3 of the Income Tax Ordinance defines the mechanism of giving/ receiving a gift. “A loan, advance, deposit or gift” should either be given through “a crossed cheque drawn on a bank or through a banking channel,” it says.

Sources said the FBR field office had apprehensions that the PM’s children did not receive the foreign remittances in a manner prescribed by the law. Secondly, Captain Safdar, who is also an MNA, also did not disclose these remittances in his assets declarations filed with the Election Commission of Pakistan (ECP).

In his article, Dr Haq wrote that his investigation showed that numerous questions and dichotomies arose from the documents contained in the Panama Papers and those filed by Nawaz Sharif and Maryam before the ECP and the FBR.

Dr Haq said as per wealth reconciliation statement for tax year 2011, Nawaz Sharif showed that he gave a gift of Rs31.7 million to Maryam Nawaz and a gift worth Rs19.45 million to his son.

He stated that Captain Safdar in his statements of assets and liabilities as on 30.06.2011 to the ECP, showed no change in the assets during the year. “If the amount was gifted to the daughter through a cross cheque as required under the law then her husband was bound to declare it,” he said.

Dr Haq wrote that this gift raises many questions. For example, as per section 39(3) of the Income Tax Ordinance, 2001 any amount claimed as gift should be received either through a cross cheque or through a banking channel from a person holding a National Tax Number.



Admittedly, the PM’s son was not an NTN holder. This amount was to be offered as income even if received through a banking channel, which Nawaz Sharif failed to do. “This needs probe,” he said.

He said as per assets declarations from 2011 to 2013, Nawaz has been receiving huge gifts through remittances from his son. Since his son is not an NTN holder, the entire amounts become chargeable to tax under the Income Tax Ordinance, 2001. “Secondly, the PM’s son  never showed these amounts in his UK returns. In other words, offshore accounts have apparently been used to send these funds,” he added.

Published in The Express Tribune, May 16^th, 2016.