ISLAMABAD: In view of growing number of cases of people amassing properties in someone else’s name, the government has decided to give tax authorities access to the family tree database of citizens – in a bid to catch these dodgers.
Some of these people have been unearthed by the Federal Board of Revenue (FBR) during its latest drive against roughly 380 top tax evaders, sources said. This week, the FBR gave a briefing on these cases to Finance Minister Asad Umar who decided that one of the solutions could be to use family tree data maintained by the National Database Registration Authority (NADRA).
However, NADRA has in the past remained reluctant to share this data. Sources said Umar has talked to NADRA chairman to make sure the authority cooperates with the FBR.
The failure of both the Pakistan Muslim League-Nawaz (PML-N) and the Pakistan Tehreek-e-Insaf (PTI) governments to make the Benami Act of 2017 operational in the past two years has also allowed people to freely keep their assets in the names of their peons, drivers and family members.
The parliament passed the law in February 2017 that authorizes authorities to confiscate the Benami properties but the Finance Ministry and the FBR have not yet framed the rules to make it operational.
The failure of the last PML-N government and also of the PTI to make the 2017 Benami Act operational has curtailed the FBR’s powers to only impose penalties against people who hold Benami assets.
The act has been passed to take punitive action against those who keep their assets in the name of others to hide the source of income and evade taxes.
Anybody found guilty of keeping Benami assets will face confiscation of property, rigorous imprisonment of up to seven years and a fine equal to 25% of fair market value of the property.
But the file to approve rules to make the Benami Act operational is pending with the Finance Ministry, which is not willing to create new posts critical for setting up adjudicating authority under the law.
It seems that the Finance Ministry is penny wise and pound foolish, as the returns that the government will get are far higher than the cost of creating more posts. But the FBR’s spokesman Dr Hamid Ateeq Sarwar hopes that the rules will be approved next week as Asad Umar has taken notice of the delay.
The FBR is also taking measures to unmask people by accessing their bank accounts. However, the Pakistan Banking Association (PBA) has certain reservations in sharing the data. The PBA and the FBR on Thursday reached an understanding to amend the Income Tax Ordinance to address banks’ concerns.
The banks would not be required to automatically share accounts information in case the deposit is less than Rs1 million. However, the FBR can seek this information on demand on case to case basis.
Recent cases of benami properties
There was a perception that only politicians and bureaucrats undertake Benami transactions to hide the source of income and evade taxes. But it now seems that the evil is not limited to Pakistan’s powerful politicians, bureaucrat, general and judges.
A joint investigation team (JIT) of the Federal Investigation Agency (FIA) found that Rs42 billion was laundered through 29 fake bank accounts and Benami assets, linking Pakistan’s powerful politicians and business groups.
In Rawalpindi, the FBR found that a property dealer has over one and half dozen undisclosed properties. When he was confronted by the FBR, he said the financier was his brother who lives abroad.
In Karachi, Rs87 million worth of vehicles have been registered in the name of a person who died in August 2016. Only in the last year, Rs50 million worth of vehicles were registered in the name of a deceased person, according to the FBR member operations.
The FBR recently unearthed another case where owner of a luxury car service provider in Karachi bought a property at a declared value of Rs110 million in the name of his driver whose monthly salary is just Rs26,500.
According to the case documents, the FBR has assessed the market value of this piece of land at Rs500 million and has started criminal proceedings. A special judge has issued bail-able arrest warrants of the accused persons.
The FBR has also decided to include the employee in the investigation on charges of abetting tax evasion. The case has been registered on allegations of tax fraud and tax evasion through investing in the name of employee.