Amendments to Income Tax Ordinance 2001 proposed

Move aimed at ensuring financial institutions submit annual reports before deadline

ISLAMABAD: The Organisation of Economic Cooperation and Development (OECD) has notified Pakistan's government of its weaknesses in implementing the globally recognised exchange of information standards.

The revelation was made by OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes in its review report pertaining to domestic legislative framework of Pakistan.

According to the report, a copy of which is available with The Express Tribune, the forum proposed amendments in legislative framework of the country for better exchange of information.

Commenting on the proposal for legislative amendments, FBR Member Inland Revenue Hamid Ateeq Sarwar said that Pakistan's Common Reporting Standards (CRS) were considered among the best global standards in the world.

"However, the recommendation, given by the Global Forum on Transparency and Exchange of Information for Tax Purposes, are aimed at amendments in the Income Tax Ordinance (ITO) rules," he said. "It will take only a week for the recommendations to be incorporated into the country's tax rules."

Multinational companies are supposed to submit their common reporting standards (CRS) by May 31.

The reports of the companies, already received by FBR, have been forwarded by the director general of international taxes.
Those companies, which did not submit their CRS reports, would be pursued for a follow-up by DG international taxes.

As per sources, FBR has advised the federal government regarding the required amendments in the Income Tax Ordinance 2001 in light of the weaknesses identified in the assessment report released by the OECD forum.

According to the assessment, the government has not made it mandatory on financial institutions to ensure that their annual reports were submitted under given dates.

OECD forum maintained that the practice should be made an integral part of common reporting rules of the financial institutions.
Accordingly, FBR has recommended that amendments be made into ITO 2001 to make May 31 the final date for submission of CRS by financial institutions.

As per sources within FBR, all reporting financial companies have already been notified of the proposed changes in AEOI standards and Income Tax Ordinance 2001.