OECD gives data of Pakistanis offshore accounts
FBR makes negligible progress on available info due to administrative flaws, 2018 amnesty scheme
A US Dollar note is seen in this Reuters illustration photo.
ISLAMABAD:
Pakistan has received new information about offshore bank accounts from the Organisation for Economic Cooperation and Development (OECD) amid negligible progress on previously obtained information due to administrative flaws and negative fallouts of 2018 tax amnesty scheme.
The Federal Board of Revenue (FBR) Director-General International Taxes Mohammad Ashfaq has described the Supreme Court as ‘the agent provocateur’ in 2018 tax amnesty plan that punctured the government’s revenues besides strengthening the grip of elites on the economy.
He has made these comments in his latest international publication.
“Forty-four member countries of the OECD have shared information about the bank and financial accounts of resident Pakistanis,” the FBR’s official spokesperson Dr Hamid Atiq Sarwar told The Express Tribune.
Pakistan expected to receive information from 71 jurisdictions that had agreed to share data with it.
Dr Sarwar said Pakistan received information from those countries where either Pakistanis live or have placed their wealth. He said last year 28 countries had shared information with Pakistan.
In September last year, the OECD had shared with the tax authorities information about over 152,000 bank accounts owned by Pakistanis. The OECD had provided information about 57,450 persons involving $7.5 billion deposits.
Developed world lacks will to act against illegal offshore wealth: PM Imran
Despite high priority of Prime Minister Imran Khan, the government could dispose of just 19 cases and recovered a paltry sum of Rs883 million ($6 million) out of total 57,450 cases worth $7.5 billion referred by the OECD, according to a presentation that DG International Taxes, Mohammad Ashfaq had given to National Assembly Standing Committee on Finance in July this year.
The FBR had committed to the NA panel that it would complete the proceedings in all the pending cases by October 31. But so far progress remains far below expectations due to non-resolution of operational issues and the notification of offshore commissioners as directors offshore has not been issued yet.
Another key reason was that many people whose data was shared with the FBR by the OECD had availed the 2018 tax amnesty scheme, given by the last Pakistan Muslim League-Nawaz (PML-N) government.
Recovering $200 billion, presumably stashed in Swiss banks, was one of the election slogans of Prime Minister Imran Khan. Former finance minister Ishaq Dar had first claimed that $200 billion was parked in Swiss banks by the Pakistanis.
Strengthening elite hold
The director-general of international taxes has written a very critical research paper on Elite Capture and Tax Amnesty Scheme. The paper has recently been published in the Asian Journal of Law and Economics.
Mohammad Ashfaq argued that elites have captured Pakistan’s economy with the help of influential groups including the Supreme Court of Pakistan.
PM Imran felicitates ‘steadfast friend China’ on 70th National Day
“All state institutions – not only the bureaucratic ones but also the constitutional ones – Parliament, media, and judiciary – appear beholden to Elites Ltd,” wrote the director-general.
He said the polity appears to have learnt nothing from its past follies, and even if it has, it continues to suffer from selective amnesia as its structures continue to exhibit brute elitist control, which is not only deepening in intensity but also widening in scope and footprint.
The last PML-N government had given the tax amnesty scheme to facilitate people to bring back their wealth. The Pakistan Tehreek-e-Insaf (PTI) government, which while in opposition was against the tax amnesty scheme, also gave one in June.
Ashfaq has described the 2018 tax amnesty scheme as a ‘tax policy abnorm’.
“Impending inflows of offshore bank and financial account information of Pakistan resident persons under the OECD’s Multilateral Convention was the main dynamic of the amnestisation initiative in which the Supreme Court of Pakistan played the role of the agent provocateur,” he stated.
The empirical results obtained help conclude that the amnestisation initiatives have helped proliferate the underground economy, and enhanced the elitist economic status quo in Pakistan.
He said the second last tax amnesty scheme was ‘oversold’ but the actual results were far below expectations. About 76,952 persons availed domestic tax amnesty, whitened Rs1.5 trillion assets by paying only Rs75.2 billion.
He said most of the Pakistanis, whose substantial offshore bank and financial accounts had been reported by the OECD, turned out to be in the export and import sectors, which meant that they were either under-invoicing exports or over-invoicing imports, and retaining the surplus foreign exchange outside Pakistan by circumventing relevant regulations.
Fake accounts case adjourned till Oct 22
The DG said the maximum tally of assets whitened was under fungible assets. In fact, out of total assets whitened. Under domestic tax amnesty of 2018, out of Rs1.5 trillion, a sum of Rs1.2 trillion was in fungible assets. This apparently means that people whitened their past earnings, but in reality, it also included whitening of future earnings.
It had also been projected that under foreign assets amnesty scheme of 2018, the funds siphoned off from Pakistan could be repatriated in excess of $4 billion.
But the value of total liquid assets that were disclosed but not repatriated comes to Rs727.85 billion, immovable assets to Rs322.56 billion and liquid assets invested in government securities to Rs3.34 billion. The liquid assets that were repatriated to Pakistan amounted to Rs6.42 billion.
The September 2018 expected exchange was exerting a lot of pressure on diverse elite groups making the state squeak under stress.
“The polity once again appeared to go down the pleasure principle path, in the process, appeasing the feudal, industrial and business elite who had amassed wealth not only in Pakistan but had also taken it out through dubious means and parked it in offshore jurisdictions,” he argued.
“The state’s capitulation under elites’ pressure was, therefore, clear: they had kept the system weak enough to take it for a ride at will, and when the occasion arose for a recoil under the international system, they were again there to have the law lowered below par to amnestise their past felonious conduct and legitimise their riches kept offshore,” he added.
Pakistan has received new information about offshore bank accounts from the Organisation for Economic Cooperation and Development (OECD) amid negligible progress on previously obtained information due to administrative flaws and negative fallouts of 2018 tax amnesty scheme.
The Federal Board of Revenue (FBR) Director-General International Taxes Mohammad Ashfaq has described the Supreme Court as ‘the agent provocateur’ in 2018 tax amnesty plan that punctured the government’s revenues besides strengthening the grip of elites on the economy.
He has made these comments in his latest international publication.
“Forty-four member countries of the OECD have shared information about the bank and financial accounts of resident Pakistanis,” the FBR’s official spokesperson Dr Hamid Atiq Sarwar told The Express Tribune.
Pakistan expected to receive information from 71 jurisdictions that had agreed to share data with it.
Dr Sarwar said Pakistan received information from those countries where either Pakistanis live or have placed their wealth. He said last year 28 countries had shared information with Pakistan.
In September last year, the OECD had shared with the tax authorities information about over 152,000 bank accounts owned by Pakistanis. The OECD had provided information about 57,450 persons involving $7.5 billion deposits.
Developed world lacks will to act against illegal offshore wealth: PM Imran
Despite high priority of Prime Minister Imran Khan, the government could dispose of just 19 cases and recovered a paltry sum of Rs883 million ($6 million) out of total 57,450 cases worth $7.5 billion referred by the OECD, according to a presentation that DG International Taxes, Mohammad Ashfaq had given to National Assembly Standing Committee on Finance in July this year.
The FBR had committed to the NA panel that it would complete the proceedings in all the pending cases by October 31. But so far progress remains far below expectations due to non-resolution of operational issues and the notification of offshore commissioners as directors offshore has not been issued yet.
Another key reason was that many people whose data was shared with the FBR by the OECD had availed the 2018 tax amnesty scheme, given by the last Pakistan Muslim League-Nawaz (PML-N) government.
Recovering $200 billion, presumably stashed in Swiss banks, was one of the election slogans of Prime Minister Imran Khan. Former finance minister Ishaq Dar had first claimed that $200 billion was parked in Swiss banks by the Pakistanis.
Strengthening elite hold
The director-general of international taxes has written a very critical research paper on Elite Capture and Tax Amnesty Scheme. The paper has recently been published in the Asian Journal of Law and Economics.
Mohammad Ashfaq argued that elites have captured Pakistan’s economy with the help of influential groups including the Supreme Court of Pakistan.
PM Imran felicitates ‘steadfast friend China’ on 70th National Day
“All state institutions – not only the bureaucratic ones but also the constitutional ones – Parliament, media, and judiciary – appear beholden to Elites Ltd,” wrote the director-general.
He said the polity appears to have learnt nothing from its past follies, and even if it has, it continues to suffer from selective amnesia as its structures continue to exhibit brute elitist control, which is not only deepening in intensity but also widening in scope and footprint.
The last PML-N government had given the tax amnesty scheme to facilitate people to bring back their wealth. The Pakistan Tehreek-e-Insaf (PTI) government, which while in opposition was against the tax amnesty scheme, also gave one in June.
Ashfaq has described the 2018 tax amnesty scheme as a ‘tax policy abnorm’.
“Impending inflows of offshore bank and financial account information of Pakistan resident persons under the OECD’s Multilateral Convention was the main dynamic of the amnestisation initiative in which the Supreme Court of Pakistan played the role of the agent provocateur,” he stated.
The empirical results obtained help conclude that the amnestisation initiatives have helped proliferate the underground economy, and enhanced the elitist economic status quo in Pakistan.
He said the second last tax amnesty scheme was ‘oversold’ but the actual results were far below expectations. About 76,952 persons availed domestic tax amnesty, whitened Rs1.5 trillion assets by paying only Rs75.2 billion.
He said most of the Pakistanis, whose substantial offshore bank and financial accounts had been reported by the OECD, turned out to be in the export and import sectors, which meant that they were either under-invoicing exports or over-invoicing imports, and retaining the surplus foreign exchange outside Pakistan by circumventing relevant regulations.
Fake accounts case adjourned till Oct 22
The DG said the maximum tally of assets whitened was under fungible assets. In fact, out of total assets whitened. Under domestic tax amnesty of 2018, out of Rs1.5 trillion, a sum of Rs1.2 trillion was in fungible assets. This apparently means that people whitened their past earnings, but in reality, it also included whitening of future earnings.
It had also been projected that under foreign assets amnesty scheme of 2018, the funds siphoned off from Pakistan could be repatriated in excess of $4 billion.
But the value of total liquid assets that were disclosed but not repatriated comes to Rs727.85 billion, immovable assets to Rs322.56 billion and liquid assets invested in government securities to Rs3.34 billion. The liquid assets that were repatriated to Pakistan amounted to Rs6.42 billion.
The September 2018 expected exchange was exerting a lot of pressure on diverse elite groups making the state squeak under stress.
“The polity once again appeared to go down the pleasure principle path, in the process, appeasing the feudal, industrial and business elite who had amassed wealth not only in Pakistan but had also taken it out through dubious means and parked it in offshore jurisdictions,” he argued.
“The state’s capitulation under elites’ pressure was, therefore, clear: they had kept the system weak enough to take it for a ride at will, and when the occasion arose for a recoil under the international system, they were again there to have the law lowered below par to amnestise their past felonious conduct and legitimise their riches kept offshore,” he added.