FBR threatens to penalise RFIs
Federal Board of Revenue (FBR) will penalize Reporting Financial Institutions (RFIs), which would fail to submit Common Reporting Standard (CRS) reports pertaining to required information of financial accounts of non-resident persons and any other reportable person by May 31, 2019 to the FBR.
According to an announcement of the FBR here on Tuesday, as per section 165(B) and 107(1) of Income Tax Ordinance, 2001 and other applicable domestic laws and rules related to Automatic Exchange of Information (AEOI), all Reporting Financial Institutions (RFIs) are required to submit Common Reporting Standard (CRS) reports on prescribed format by May 31, 2019 in accordance with CRS rules notified by the FBR vide SRO 166 (I)/2017 dated March 15, 2017. Failure to make complete and timely compliance will be penalised under the section 182 of the Income Tax Ordinance, 2001. For guidance and submission of reports, the FBR AEOI portal on the official website of the FBR has been set up, the FBR added.
Under the SRO 166 (I)/2017, Reportable Person means a person other than a corporation, the stock of which is regularly traded on one or more established securities markets; any corporation that is a Related Entity of a corporation described; a governmental entity; an international organization; a central bank; or a financial institution.
Each RFI shall report the required information with respect to each Reportable Account of such Reporting Financial Institution to the FBR including name, address, jurisdiction of residence, TIN and date and place of birth of each reportable person that is an account holder of the account and, in the case of any entity that is an account holder, etc, and other specified information.
A tax expert said that in September 2016 Pakistan signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and became 104th signatory to the Convention. The Convention provides for automatic exchange of information under the State’s own systems through standardized formats under the corresponding agreements with other jurisdictions. The Federal Board of Revenue (FBR) had subsequently undertaken a project on Automatic Exchange of Information (AEOI) in collaboration with different stakeholders.
Later, the FBR had finalised Common Reporting Rules and notified the same vide SRO 166 (I)/2017 dated March 15, 2017. With this Pakistan has adopted the global standard for automatic exchange of financial account information in tax matters commonly known as the Common Reporting Standard (CRS) as developed by the Organization for Economic Cooperation and Development (OECD).
The CRS Rules inter alia required financial institutions to start due diligence of customers from July 1, 2017. Financial institutions are required to ensure the compliance with the Rules for reporting under the CRS in accordance with relevant laws and take all necessary steps to put in place requisite systems/ mechanism in timely manner, he added.