FBR to bring dollar hoarders into the tax net, seeks data from foreign exchange companies
Dollar hoarders artificially increase the demand for foreign currency and apparently, no law in Pakistan prevents individuals from buying dollars or ascertain them to put forth the details of purchasing the foreign currency.
To bring the dollar hoarders into the tax net the taxation authority of Pakistan is all set to investigate foreign exchange companies about the transaction details of individuals who purchased foreign currency over the past few months. FBR would launch a major crackdown in this regard, an official confirmed to The News.
Dollar hoarders artificially increase the demand for foreign currency within the market thereby making the local currency significantly weaker. Apparently, no law in Pakistan prevents individuals from buying foreign currency or ascertain them to put forth the details of purchasing the foreign currency.
A meeting regarding hoarding of US dollars was held at the start of August this year which was attended by the officials of SBP, DG FIA, representatives of FBR, ISI, and Anti-Narcotics Force. The Director-General of Financial Monitoring Unit was also among those who attended the meeting.
The report added that FBR also asked the central bank to provide information on transactions made by the exchange companies. The current value of the dollar which is anticipated as much higher than the actual value is due to the hoarding by some elements.
In its response to FBR, the State Bank said that it is a statutory body that supervises exchange companies under the relevant provision of the Foreign Exchange Regulation Act, 1947.
However, FBR is authorized to collect transaction data from the exchange companies or any other financial institution under the provisions of Income Tax Ordinance 2001, the central bank added in its response at the request made by FBR.
The FBR source confirmed that the tax offices would ask exchange companies to provide details of persons who purchased dollars for remitting the foreign currency for the purpose of education, health, and other matters. The exchange companies are required to deduct income tax from persons purchasing dollars and remitting abroad for educational purposes.
The source further said that the penal action would be launched as per law on the detection of misuse of the facility of allowing remitting foreign currency, adding that the exchange companies are also required to provide the information of persons who purchased dollars for the purpose of education, health, and other matters.
How do see the performance of FBR to broaden the tax net? Suggest some ways to increase the tax income without burdening the poor? Share your views in the comment section below