- Opposition alleges the bill would have given cover to offshore holdings of PM’s family
- FBR officials say amendments were necessary to get membership of OECD, which can be used to get details of Pakistanis’ accounts in Swiss banks
The Senate Standing Committee on Finance on Saturday unanimously rejected the exemption sought from imposing any tax liability on foreign trusts through the Finance Bill.
The committee chaired by Senator Saleem Mandviwala rejected the proposal saying the government should present the proposal in a separate bill if it wants to get it approved. The tax authorities tried hard to convince the committee saying that the amendment was required to get membership of the Organisation of Economic Cooperation and Development (OECD).
The OECD membership can help Pakistani authorities get details of Pakistanis’ accounts in Swiss banks.
“Show us the letters or any emails from the OECD,” said Mandviwala, who added, “We will not hesitate to approve it immediately.” However, the tax officials said that the letters were with the finance minister.
The opposition has alleged that the amendment was introduced through the Finance Bill to provide immunity to Maryam Nawaz, daughter of Prime Minister Nawaz Sharif, and his heir-apparent. Maryam Nawaz is the trustee of two offshore firms; this information was leaked through Panama Papers.
The committee expressed serious reservations over the discrepancy pointed out in the income tax rules under which the public sector hydel power projects of Khyber Pakhtunkhwa were being taxed. However, all independent power producers (IPPs) and WAPDA hydel power plants are exempted from income tax.
The Federal Board of Revenue (FBR) admitted that there was some disparity in the implementation of IT rules but assured the committee that the anomaly will be settled within the next one week.
After some initial reluctance, the committee approved implementation of the new method of income tax recovery from developers and builders. The FBR has proposed that instead of directly getting income tax from them they should be assessed on the basis of under-construction area.
Tax authorities proposed taxing commercial areas at Rs 2,500 per square foot while residential areas will range between Rs 750 and Rs 3,000 per square foot. Senators said that the price of real estate depends upon location. The proposed rates were too low for real estate in posh areas.
The FBR officials said that they lacked the expertise to assess the market value but assured that the implementation of new scheme will help get more from developers and builders who were paying a paltry sum of Rs 3 billion per annum. The new system is estimated to generate over Rs 8 billion in the first year. The committee approved the proposal but directed the FBR to look towards measures to tax the files of the Defense Housing Authority (DHA) and Bahria Town.
The committee rejected amendments in the Fiscal Responsibility and Debt Limitation Act. The FBR authorities said that they were not aware of who put it in the bill as it was not part of taxation. The Ministry of Finance was held responsible for including the act in the finance bill. The committee directed that these amendments should be brought in separately through a new bill.