Panama Leaks: FBR sends 303 notices, receives 94 replies

ISLAMABAD: Pakistan’s Securities and Exchange Commission and the State Bank on Wednesday declared that they had nothing to do with the investigation of Panama Leaks concerning Pakistanis holding offshore companies. However, the Federal Board of Revenue (FBR) was after the issue and had sent notices to 303 individuals and companies while others were under scrutiny and had received 94 replies.

FBR Chairman Nisar Muhammad Khan said this while briefing the National Assembly’s Standing Committee on Finance, Revenue and Economic Affairs here on Wednesday about the Panama Papers issue and actions taken in this regard. He clearly stated that the main role of the FBR was to monitor the matter and find out if taxes had been paid on income and transactions of funds by Pakistani residents for forming companies abroad. He told the committee that the FBR had taken some important measures with regard to the investigation into the Panama issue. He said that Director General of FBR’s Directorate of Intelligence and Investigation was given the task to investigate the matter.

Interestingly, opposition party Pakistan Tahreek-e-Insaf (PTI), which had been agitating against the government over the PanamaLeaks for months, did not attend the meeting. There was also no member of the Pakistan People’s Party in the meeting. Although, MNA Nafeesa Shah of the PPP came to the meeting for 10 minutes but left the meeting saying that their parliamentary party meeting was underway and she had to attend it.

Khwaja Tanveer, DG of the FBR Directorate, informed the committee that certain constraints were there before starting the subject assignment, because incomplete information was published by the media. However, 444 cases were found by the Customs Intelligence and, accordingly, the FBR had investigated and traced 303 addresses. Later, notices were issued under the Income Tax Section 176, Ordinance, 2001, to these 303 individuals asking about different information.

The federal revenue body told the standing committee that out of 303 notices sent, only 94 had been responded to. Of these, 33 had been sent with adjournment request saying their company was dormant, shares were sold or the owners only 14 people admitted having their companies abroad while 17 outrightly denied. FBR chairman assured the Committee that FBR would do its job with devotion and honesty without any discrimination.

The National Assembly’s Standing Committee met here with MNA Qaiser Ahmad Sheikh in the chair to take briefing from the State Bank, SECP and the FBR on Panama papers issue and action taken in this regard. 

Regarding further investigation into the matter, Tanveer said where replies were not received to notices, reminders had been issued. If response was still not received till compliance date, penalty notices would be issued to them. The penalty would be imposed on (resident) non-compliant cases.

Explaining the penalty amount, he said that Rs25,000 would be imposed on first default and Rs50,000 for each subsequent default. He further said that in persistent non-compliant cases, option of initiating proceedings in trial court was available with the government.

It has been also decided to move for signing of Tax Information Exchange Agreement with Panama, Bahamas, British Virgin Islands, Isle of Man and similar jurisdictions. On signing the agreement, FBR would seek information from revenue authorities of these jurisdictions about individuals and entities disclosed in Panama Papers, Khwaja said.

SECP Chairman Zafar Hijazi while briefing the Committee said that SECP had provided required information to FBR about the companies registered with SECP. He said that SECP was regulator for inland companies only and SECP had no concern with foreign companies adding that the commission had done its duty on its part, and the regulator (SECP) had nothing to further do with this entire Panama affair.

Deputy Governor of State Bank of Pakistan (SBP) informed the Committee that SBP had no role with regard to the Panama Papers. The SBP was not an investigation agency, but a regulator of the banks, however it kept watchful eye on suspicious transaction. “If it notes such transactions, it sends it to the Financial Monitoring Unit (FMU) and then to the Federal Investigation Agency (FIA).

FBR Cahirmar Nisar Muhammad Khan said if a Pakistani resident had evaded tax and set up a company abroad, the FBR would ask the owner, otherwise forming company after paying taxes was not illegal. 

The meeting was attended by MNA Saeed Ahmed Khan Manais, Rana Shamim Ahmed Khan, Daniyal Aziz, Muhammad Pervaiz Malik, Sardar Muhammad Jaffar Khan Leghari, Sheikh Fayyaz-ud-Din, Mian Abdul Mannan, Ms Shaza Fatima Khawaja, Ms Leila Khan, Abdul Rashid Godil besides senior officials from Ministry of Finance and Revenue, SECP, SBP also attended the meeting.