The federal government has reinitiated its age-old quest for offshore bank accounts. The Federal Board of Revenue (FBR) has empowered the Directorate General of International Tax Operations to go on the latest treasure hunt under Section 230-E of the Income Tax Ordinance, which had been on the books since February but had not been operationalised. The FBR has given chief commissioner-level powers to the International Taxes director general, commissioner-level powers to directors, and additional commissioners’ powers to additional directors. But, legally speaking, FBR officials have said directors can’t exercise the powers of commissioners.
Then there was the matter of delayed accountability. The PTI government took four months to issue a simple notification that would have allowed FBR officials to look into foreign accounts using the information provided by the Organisation for Economic Cooperation and Development (OECD) — details of around 152,000 bank accounts with a total of $7.5 billion in deposits. The reason for this delay was ostensibly the government’s tax amnesty scheme, although the government could have allowed investigations to run parallel to the amnesty scheme, with prosecution held back till the scheme ended.
The introduction of Section 230-E was also problematic, as it did away with the old international taxation regime without properly empowering the new one. At the time, there were also differences among tax authorities whether the February legal amendment should be retained in the law or it should be deleted. Under the previous regime, set up by the PML-N in 2017, Automatic Exchange of Information Commissionerates in three big cities dealt with offshore information provided by the OECD. This set-up had been processing nearly 340 cases on the basis of OECD information till February 2019. Then all work stopped.
Meanwhile, although the FBR spokesman claims that the commissioners have disposed of a ‘large number of cases’, this newspaper has quoted sources as saying that the directorate could give effect to only one ‘major’ recovery of Rs785 million in Karachi, and even that was many months ago. Overall, only 12 cases have been disposed of. The road to recovery remains painfully long.
Published in The Express Tribune, July 11th, 2019.