It is deeply embarrassing for a country to be reprimanded for stalling on its international commitments to prevent tax evasion and the setting up of offshore accounts for stashing ill-gotten wealth. The lethargy shown on the part of our official tax machinery has triggered a warning from the Organisation of Economic Cooperation and Development (OECD) that Pakistan may lose the right to receive information on a reciprocal basis from 104 other signatories if it fails to implement the required measures. A year ago, Pakistan signed the Convention on Mutual Administrative Assistance in Tax Matters in the wake of the Panama Papers case. A signatory to the convention is required to share information regarding offshore accounts and accordingly set up six automatic exchanges of information (AEOI) zones in the country. Pakistan may have established the automatic exchanges of information but it has not taken measures in terms of the arrangements of data safeguards, as had been proposed by a team from the OECD Secretariat during the month of July. In the interest of both confidentiality and data safeguards, the OECD representatives also proposed that record rooms be established in each automatic exchanges of information zone.
If Pakistan continues to take half measures on this count, it cannot expect to access information regarding its residents’ bank accounts and assets in 104 countries. We should have started receiving information from domestic banks for the July-December period. Such access is important because it will enable Pakistan to discover undetected tax evasion and recover the tax revenue that is lost to non-compliant taxpayers.
Two major obstacles stand in the way: adequate funds have not been released for the AEOI zones and top FBR officials are preoccupied with Finance Minister Ishaq Dar, who is currently facing a NAB reference. The authorities must overcome these difficulties as soon as possible. We watch with interest.
Published in The Express Tribune, October 9th, 2017.