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ISLAMABAD: Foreign currency accounts are the main source of dollar outflow from the country and there is need to amend the law in this regard, the Senate Standing Committee on Finance observed on Thursday.
“Those who made this law were either sleeping or had criminal targets in mind. The law allows one to take dollars out of the country without any problem,” Senator Mohsin Aziz noted.
Committee Chairman Saleem Mandviwalla said there is a need to discuss several laws, while referring to certain amendments in the Income Tax Ordinance.
He asked the Federal Board of Revenue (FBR) officials if foreign currency account holders are tax payers or filers. The official reply noted that no effort was made to detect this.
If a person holds a foreign currency account but is not ready to pay tax or is not eligible for it, then what is that person doing with the dollar account, questioned Mr Mandviwalla.
The committee was informed by Secretary Finance Dr Waqar Masood that there were around 535,000 foreign currency accounts in the country.
Dr Masood added that there is no law that a forex account holder has to be a tax payer.
“We act according to the law. Anybody can buy dollars from the open market, deposit the currency in forex accounts and even remit it out of the country,” Dr Masood said.
Facing a barrage of criticism from committee members, the finance secretary added that amendments in the law can be made by the Parliament and the Senate Standing Committee on Finance can even initiate in this regards.
“There are strict laws in many countries including India, where dollars and other foreign currencies are not sold in the open market. A law can be made that dollar account holders cannot remit money,” he suggested.
The Committee decided to defer the matter for the next meeting.
Circular debt: After more than three years, the Ministry of Water and Power provided details about the payment of Rs341 billion circular debt in 2013.
The committee was provided a list of IPPs which were given Rs270bn to clear their debt. The remaining amount was given to PSO and gas utility companies for fuel supplies.
The committee was informed that the amount was transferred from the State Bank to National Bank — the latter disbursed it to the accounts of relevant IPPs on June 28, 2013.
When questioned how the entire deal took place in one day, water and power ministry’s Joint Secretary Zargham Khan said the entire exercise began in the month of May and it was directed by the government.
The water and power ministry officials said calculating circular debt is a continuous exercise, adding that currently it has reached to Rs329bn again.
The committee was informed by the FBR officials that Rs28bn was pending in terms of sales tax and income tax while the refund amount is Rs13bn, however the power ministry has yet to settle it.
The committee was also briefed by Benazir Income Support Programme Chairperson Marvi Memon.
Published in Dawn, October 28th, 2016
