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No notice issued in Paradise Papers cases

Updated February 11, 2018

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ISLAMABAD: The country’s tax machinery has so far not issued notices to the Pakistanis whose investment in offshore companies was revealed in the Paradise Papers of November 2017.

The International Consortium of Investigative Journalists (ICIJ) released a report last November in which it was claimed that 135 Pakistanis, including former prime minister Shaukat Aziz, owned offshore companies. Initially it was decided that the Federal Board of Revenue (FBR) would let its intelligence and investigation wing issue notices to all those who had been identified in the report, an official told Dawn. The individuals concerned were also to be named in the media.

However, according to a source, the FBR later changed its decision and instead asked its regional tax offices (RTOs) to issue notices to the persons concerned. But “neither the RTOs nor the intelligence wing of Inland Revenue has issued any notices so far,” the source said.

As per the law, notices in such cases can only be issued by the FBR’s intelligence and investigation wing because the government has extended the anti-money laundering powers only to that particular unit.

It seems the FBR has delayed the process due to opposition to the issuance of notices. That’s why the issue has been put on the backburner, according to the source.

The ICIJ had earlier unearthed the Panama Papers. The intelligence directorate of the FBR issued 344 notices to owners of offshore companies in September 2016. But the response is very poor.

The data compiled so far reveal that show-cause notices were issued to only 10 persons in the wake of Panama Papers’ emergence. The penalty mentioned in the show-cause notices was only Rs25,000, as per the Income Tax Ordinance.

Interestingly, only 72 people confirmed that they owned offshore companies. Twelve individuals named in the papers were reported to be dead. And 55 persons denied that they had links with offshore companies.

Eighty-four notices were delivered to the addresses mentioned in the papers, while the RTOs were in correspondence with 57 individuals, the sources said.

As many as 44 individuals were identified as non-Pakistani residents. A senior official said on the condition of anonymity that RTOs had not pursued the cases properly. That was why the response from the people getting notices was very poor.

He said the experience had shown that leaks only helped in identifying the names of certain people. The challenge before the FBR was to obtain details of the assets accumulated by such people. Such details were not shared in documents like the Panama Papers.

The official admitted that the Paradise Papers leaks had been mishandled. The FBR’s I&I wing should issue notices to all those people identified in the papers as owners of offshore companies, he added.

Published in Dawn, February 11th, 2018