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First tax recovery made under Panama Papers investigation

Updated September 09, 2018

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Names of 259 Pakistanis with links to offshore companies surfaced in Panama Papers — one of the world’s biggest ever data leaks made public by the International Consortium of Investigative Journalists (ICIJ) in 2016.
Names of 259 Pakistanis with links to offshore companies surfaced in Panama Papers — one of the world’s biggest ever data leaks made public by the International Consortium of Investigative Journalists (ICIJ) in 2016.

ISLAMABAD: Exactly two years after starting the exercise, the tax authorities have reported their first recoveries under the investigations into assets held by individuals named in the Panama and Paradise papers.

Data from the Federal Board of Revenue, obtained by Dawn, shows that the Karachi and Islamabad LTU have made the first recovery of tax since the start of the exercise.

The FBR has recovered a total amount of Rs6.2 billion out of total demand created in 15 cases. The recovery of the remaining amount of Rs4.64bn remains under process.

The break up shows that in six cases notices were issued to members of a single leading business family by the Islamabad LTU. The tax demand raised from the family was about Rs4.6bn out of which only Rs15m has been recovered from them.

The single largest tax demand of Rs3.164bn was raised from a Karachi based individual, which has been recovered in full by the Karachi LTU.

The second largest recovery of Rs2.691bn was made from another Karachi-based individual where the tax demand was also recovered in full, followed by another amount of Rs350m from a third individual also based in Karachi.

In Sept 2016, the FBR Intelligence Directorate issued 444 notices to owners of the offshore companies mentioned in the Panama Papers.

Documents seen by Dawn show that notices could not be delivered to as many as 151 Pakistani individuals categorised in 73 cases as “untraceable.” The only reasons mentioned for non-delivery is incorrect or incomplete address.

Moreover, another bulk of 78 cases was bracketed undelivered due to non-availability of sufficient particulars of these Pakistani individuals. Seventeen cases were unregistered so far due to other reasons.

Consequently, the proceedings were initiated only in 276 cases in which notices were issued to the individuals, who confirmed owning offshore companies. The only updates available with the FBR is that notices are being issued to these individuals and in most of the cases returns of income and wealth statements have been enforced.

The tax authorities plead that the leaks only identify the names of people who have investments in tax havens, but the challenge for the tax authority was to obtain details of the assets accumulated by those individuals, which were not shared in such leaks.

It was mentioned in the report that wealth declarations were filed regularly by the people named in the leaks, but no offshore asset was shown. In some cases, taxpayers have denied having any offshore asset and there is no source of verification available with the FBR.

In certain cases, individuals are not traceable specifically being non-resident.

Under the Paradise Leaks, a total of 38 individuals were identified who have purchased properties abroad. The FBR has issued notices to all those individuals who are traceable so far.

As per latest updates, proceedings were initiated and finalised only in two of these cases only so far by creating tax demands of Rs283.5m. However, no recovery has been made so far.

The third leak, the Bahamas Leaks named 150 Pakistanis. However, the whereabouts and identities were established only in 108 cases. But FBR has not issued a single notice to people named in Bahamas Leaks. “We have not issued a single notice”, a senior official confirmed to Dawn.

Published in Dawn, September 9th, 2018