ISLAMABAD: Pakistan signed on Wednesday the Multilateral Convention on Mutual Adminis­trative Assistance in Tax Matters of the Organisation for Economic Cooperation and Development (OECD) in Paris.

The convention is an instrument for international tax cooperation that provides for all forms of administrative assistance in tax matters: exchange of information (EOI) on request, spontaneous exchange, automatic exchange, tax examinations abroad, simultaneous tax examinations and assistance in tax collection.

It also guarantees extensive safeguards for the protection of taxpayers’ rights. By signing the convention, Pakistan has shown its commitment to fighting offshore tax evasion and avoidance.

Pakistan is a member of the Base Erosion and Profit Shifting (BEPS) framework and will automatically exchange country-by-country reporting as required by the BEPS package.

Finance Minister Ishaq Dar signed the convention in the presence of OECD Secretary General Angel Gurria, which makes Pakistan the 104th jurisdiction to join the convention.

Mr Dar also held a bilateral meeting with the OECD secretary general to discuss ways and means to further strengthen the existing ties between Pakistan and the OECD. He conveyed Pakistan’s desire to become a key OECD partner country and reaffirmed the national determination to cooperate with the international organisation.

The convention was developed jointly by the OECD and the Council of Europe in 1988 and amended in 2010 to respond to the call by the G20 to align it to the international standard on the EOI.

The Global Forum on Transparency and Exchange of Information for Tax Purposes of the OECD has carried out a peer review of the implementation of the international standards in practice in Pakistan.

It rates Pakistan as largely compliant with the international standard. Pakistan’s legal framework ensures that ownership, accounting and banking information is available and can be obtained in line with the standard. The main findings of the report reveal a room for improvement in supervision and enforcement of obligations by ensuring the availability of ownership and accounting information.

Pakistan is also advised to improve its response time to requests for the EOI. The report further notes a potential ambiguity concerning the rules regulating the confidentiality of information exchanged under Pakistan’s agreements.

The review states that Pakistan has generally in place organisational processes and resources to ensure effective EOI. Out of Pakistan’s 65 EOI agreements, four do not meet the international standard and only one contains the OECD model wording. Pakistan should continue to renegotiate its order treaties and bring all of them in line with the international standard, the review says.

It observed that Pakistan was not able to respond in a timely manner in several cases with half of the requests responded after a year. The main deficiencies relate to the handling of requests at the local level and lack of rigorous monitoring and follow-up action by the Federal Board of Revenue (FBR) in cases where information is not provided within the prescribed deadline.

Published in Dawn, September 16th, 2016