02/03/22

INDIA: Pakistan govt bars agencies from investigating tax amnesty schemes.

As published on tribune.com.pk, Wednesday 2 March, 2022.

ISLAMABAD: The government has legally barred financial crime-investigating agencies from seeking any information related to tax amnesty schemes, including the latest money whitening scheme, saving the necks of six top taxmen from the hands of the National Accountability Bureau.

These schemes were announced respectively by former premier Shahid Khaqan Abbasi and Prime Minister Imran Khan in 2018 and 2019 to legalise the offshore and domestic assets and the 2022 scheme, which was officially announced on Tuesday to facilitate the industrialists by whitening their black money.

The move, made through Income Tax Ordinance of 2022, will also bury these files forever or until the law is amended again. The government has also stopped the general public from seeking any information about these three tax amnesty schemes under the Right to Information Act of 2017.

NAB and the Federal Investigation Agency cannot ask the Federal Board of Revenue (FBR) to share information about the beneficiaries of offshore and domestic tax amnesty schemes of 2018 and 2019 and the 2022 industrial sector tax amnesty scheme, according to the cabinet documents.

The decision has been taken to stop NAB from asking the FBR to share classified information, which under the tax laws is protected and cannot be shared with anybody.

Upon refusal by the FBR to share this information, NAB had served call-up notices on nearly half a dozen top taxmen for not providing legally protected information that a taxpayer had shared with the FBR under the 2019 offshore assets tax amnesty scheme.

The anti-corruption watchdog had sought the information about seven people, belonging to a political family of Khyber-Pakhtunkhwa, according to the documents of NAB and the FBR.

The government has amended sub-section 2 of Section 216 of the Income Tax Ordinance that deals with the disclosure of information to keep NAB and the FIA at a distance from the information submitted to the FBR under the three tax amnesty schemes.

“Notwithstanding anything contained----the National Accountability Ordinance, 1999, the Federal Investigation Agency Act, 1974 and the Right of Access to Information Act, 2017, or any other law for the time being in force, no court or other authority shall, save as provided in this Ordinance, require any public servant to produce before it any return, accounts, or documents contained in, or forming a part of the records relating to any proceedings under this Ordinance, or declarations made under Section 100F of this Ordinance or made under the Voluntary Declaration of Domestic Assets Act, 2018, the Foreign Assets (Declaration and Repatriation) Act, 2018 or the Assets Declaration Act, 2019 or any records of the Income Tax Department generally, or any part thereof, or to give evidence before it in respect thereof.”

It is the second time in the past six months that the government has directly or indirectly amended Section 216. Last time, the government amended Section 216 to share general public’s information with NAB and give legal cover to an illegal act by the tax authorities.

In September, the government had deleted Section 198 of the Income Tax Ordinance of 2001 to give NAB access to data of taxpayers with effect from 2001.

The omitted Section 198 said, “A person who discloses any particulars in contravention of Section 107 or Section 216 shall commit an offence punishable.”

But the latest amendment has been made to save the senior FBR members from undue pressure exerted by NAB. NAB was asking about the information of a person whose name had surfaced in the Panama Papers.

But the person had availed the tax amnesty scheme and the FBR informed NAB that the law stopped its people from sharing the tax and asset information of those who availed the amnesty schemes. The Law Division also backed the FBR’s position.

NAB still served the call-up notices on members of information technology, operations, administration, legal and headquarters of the FBR. Incidentally, those who had received call-up notices were eligible to be promoted and their names had been communicated to the Establishment Division for consideration by the promotion board.

The sources had told The Express Tribune that out of the seven members of the political family, only one person had availed the tax amnesty scheme and he was not a public office holder. The law says that no tax amnesty declaration can be used as evidence against the declarant. It also says that the amnesty law will override any other law for the time being in force.

The income tax law also bars the taxmen from disclosing taxpayers’ information. However, this clause has now been amended to the extent of high public office holders and civil servants.

NAB was of the opinion that under Section 27 of the National Accountability Ordinance 1999, the confidentiality clause contained in the Voluntary Declaration of Domestic Assets Act, 2018 is inapplicable to the NAB Ordinance because it has an inherent power to proceed in this regard, according to the documents.