LAHORE: The Imran Khan government believes that the Pakistani nationals having more than 152,500 offshore bank accounts could have stashed away a hefty sum of $11 billion, half of which is presumed to have never been declared by them, out of the country.
“…the number (of offshore accounts) is mind-boggling. So is the amount involved and the names of account holders,” Hammad Azhar, the Minister of State for Revenue, told businessmen at the Lahore Chamber of Commerce and Industry (LCCI) here on Monday.
“All of these offshore account holders are resident Pakistanis and more than half of the hard currency stashed away by them is undeclared. Many of them do not have legitimate, documented business. That should be enough to underscore the scale of tax evasion (in the country). We wouldn’t have to beg if we could bring this money back home,” he claimed, saying the offshore account holders were being watched by the Federal Board of Revenue (FBR).
The information about the offshore bank accounts of Pakistani nationals was shared with the government by the Organisation for Economic Cooperation and Development (OECD).
Minister claims more than half of this hard currency is undeclared
FBR chairman Jahanzeb Khan had told a parliamentary panel last week that the board had neither set any tax recovery target from the holders of these accounts nor seen any tax potential from the Panama Papers leaks. The tax recovery target could not be given on the basis of information received about the offshore accounts because the account holders might have transferred money through legal channels or have plausible justification, he was quoted to have told the panel.
Around 400 account holders are believed to have cash of $1 million or above in their accounts and the FBR has so far been able to recover $1.2m from one individual as tax since the OECD shared the information with the country’s top tax agency.
Several years ago, former finance minister Ishaq Dar had claimed that Pakistani nationals had parked a whopping $200 billion in Swiss accounts but never given the source of his information. Based on his claim, the Pakistan Tehreek-i-Insaf promised to recover this money after coming to power. The prime minister has also set up the Asset Recovery Unit for this purpose.
Hammad Azhar said the government had “deployed technology” using database of the National Database and Registration Authority, Federal Investigation Agency, State Bank of Pakistan and FBR to profile potential taxpayers in Pakistan. “…almost half the work is already done and by end of April the profiling of such tax evaders will be completed.”
He said the induction of technology would help reduce human interaction between tax collectors and taxpayers and resolve such issues as harassment of the business community. “Successive governments have made the tax regime and administration a complicated affair, which has resulted in massive tax evasion and smuggling… it’s time we broaden the tax base now,” the minister said, listing the actions the PTI government has taken thus far for this purpose.
“We are reviewing the powers of the FBR; we have to make tough decisions to net tax dodgers to facilitate the business community and lift the burden of indirect taxes on common man. We could have achieved the tax collection target by pursuing the previous policy of shifting the burden on common people and businesses through more indirect taxation. But we chose to take the difficult route (to economic stabilisation),” he added.
Published in Dawn, March 19th, 2019