Pakistan to sign 98-state convention for tax information exchange
ISLAMABAD: In a major development, Pakistan has been formally offered to sign and ratify a 98-countries’ convention — “Multilateral Convention on Mutual Administrative Assistance in Tax Matters” — to check tax evasion and tax avoidance by any of its nationals living in any of the member countries.
Signing the convention will allow Pakistan to get automatic information of Pakistanis’ wealth and investment in the US, European and other member countries.Official sources said that the Federal Board of Revenue has received a formal letter from the Organisation for Economic Cooperation and Development (OECD), inviting Pakistan to sign the convention. The sources said that the convention has to be signed by Finance Minister Ishaq Dar, who is expected to visit Paris in October this year to formalise the agreement.
The sources claim that this convention has already been signed and ratified by 98 countries and Pakistan would be the 99th state to have entered into such a global agreement to check tax evasion and money laundering.
The convention is said to be the most comprehensive multilateral instrument available for all forms of tax cooperation to tackle tax evasion and avoidance. The convention was developed jointly by the OECD and the Council of Europe in 1988 and amended in 2010 to respond to the call by the G20 to align it to the international standard on exchange of information to open it to all countries, ensuring that developing countries could also benefit from the new more transparent environment. Already, 98 countries have joined the convention.
The convention facilitates international cooperation for a better operation of national tax laws, while respecting the fundamental rights of taxpayers. The convention provides for all possible forms of administrative cooperation between states in the assessment and collection of taxes, in particular with a view to combating tax avoidance and evasion.
The cooperation ranges from exchange of information, including automatic exchanges to the recovery of foreign tax claims. The Convention on Mutual Administrative Assistance in Tax Matters by virtue of its Article 6 requires the competent authorities of the parties to the convention to mutually agree on the scope of automatic exchange of information and the procedure to be complied with.
The convention is considered the most comprehensive multilateral instrument available for all forms of tax cooperation to tackle tax evasion and avoidance.
