ISLAMABAD: Pakistan has decided to approach Turkey and Russia to get information about assets that Pakistanis have presumably stashed there after known offshore tax havens came on the authorities’ radar in the wake of the Panama Papers leaks.
The decision to approach the tax authorities of these two countries was taken by Prime Minister Imran Khan during a meeting that he chaired last week, senior officials of the Federal Board of Revenue (FBR) told The Express Tribune.
On January 30, the PM took a number of decisions to curb corruption in the FBR, discourage under-invoicing of imports from China and trace with the help of intelligence agencies people who had been named in the Panama leaks. Imran Khan also gave two-week time to FBR Chairman Jehanzeb Khan to take steps that must signal that the organisation is serious to curb corruption.
One of the important decisions was to immediately establish contacts with Russian and Turkish tax authorities to get information about Pakistanis who have assets in these two foreign jurisdictions.
The Panama leaks that changed the political landscape of Pakistan had revealed the hidden offshore assets of over 300 Pakistanis in April 2016. Due to delay in taking action against these people, the money was moved from known tax havens to other foreign jurisdictions.
Pakistan already has an agreement on tax matters with Turkey. But it does not have such an arrangement with Russia, although the federal cabinet in 1998 had allowed negotiating a taxation treaty.
The FBR has been unable to recover any significant amount from those named in the Panama leaks. The officials said that despite the window available under the Organisation for Economic Cooperation and Development (OECD), Pakistan did not write to foreign jurisdictions to get the critical information.
But the Pakistan Tehreek-e-Insaf (PTI) government has claimed that it has written to foreign jurisdictions – including the Republic of Panama, a small Latin American state – to get information.
The officials said it is a time consuming exercise to get such information, although Panama is bound to share it under the OECD arrangement. The officials said the PM also asked the FBR to seek help of other authorities, mainly the Federal Investigation Agency (FIA), to trace people who remained off the FBR’s limits even almost three years after the Panama leaks episode.
The FBR claims that the information provided in the leaks was largely general in nature. The details like the exact identity of the person and nature of investment was not available with the tax machinery.
The PM also directed the Ministry of Foreign Affairs to request China to further broaden the scope of exchange of information on trade matters. Last year, Pakistan and China started exchange of data information (EDI) on imports and exports. But the scope of such information is limited to only trade under the Free Trade Agreement, which constitutes nearly 60% of the total bilateral trade.