SC Seeks Report On Foreign Currency Transactions Above $50K
Hopes dashed for ill-gotten assets and wealth recovery from abroad; Supreme Court seeks details within 7 days of all transactions above $50,000 from Pakistan during 2017-18.
April 27, 2018 (DESPARDES/PKONWEB) — The Supreme Court has sought details of all transactions above $50,000 from Pakistan during the year 2017-18, and instructed the State Bank of Pakistan on Thursday to submit a sealed report on the matter within seven days.
Headed by the Chief Justice of Pakistan Mian Saqib Nisar, a three-judge bench passed the instructions during a suo motu hearing of a case pertaining to foreign bank accounts owned by Pakistani citizens.
The top judge remarked that the country’s court should know of Pakistani citizens holding accounts and properties in Switzerland.
Meanwhile, a committee constituted last month by the Supreme Court, has advised the top court to ‘be pragmatic’ in its approach, cautioning that aggressive steps may damage the economy.
The terms of reference (TORs) of the committee included suggesting ways to trace and retrieve assets from abroad in view of suo motu notice on the ill-gotten money of Pakistani citizens in foreign banks.
The bench noted that the main task of the committee was to give recommendations to identify those people, who sent money abroad.
“We are saying again and again to identify those who hold assets in foreign countries,” the bench noted.
However, the SBP governor said in the 28-page report that that was not mentioned in the mandate of the committee, adding the government cannot trace the national wealth which is lying in foreign accounts.
However this information would be obtained under the multilateral exchange of information treaty, which would be enforced from September, it said.
The committee while submitting its report says that in principle it did not support amnesty for tax evaders announced last month, adding it was conscious of the fact that a purist approach may not yield the desired outcome in this case.
It proposes that practical realities and constraints sometimes compel adoption of ‘pragmatic policies and trade-offs’.
It says in order to effectively deter the flow of funds through illegal Hundi and Hawala channels, there is a need to increase punishment and penalties by amending the Foreign Exchange Regulation Act 1947.
“The accounts of the Hawala business must be forfeited and the account holders black-listed for opening any local or foreign currency account in future.”
The committee, however, nurses no hopes of tracing the foreign assets of Pakistani citizens held abroad.
“It is a total failure of the state that foreign assets cannot be deducted,” the bench remarked.
Regarding the introduction of recent amnesty scheme, Justice Umar Ata Bandial observed, “You are giving the carrot but you don’t have the stick,” adding, “When you have no information about foreign assets, then how anyone will voluntarily avail this amnesty.”
Justice Bandial said the incentive would be effective only when it prescribes punishment as well for non-compliance, adding instead of relying on foreign laws, why the government does not make its own law.
The bench has also hinted at suspending the Protection of Economic Reforms Act 1992 that prevents the government from disclosing details of foreign account-holders and the money they deposit in their accounts.
“Such policies were self-made for own benefit through which money can be transferred abroad,” Justice Nisar remarked. The chief justice further added that the aim is to take advantage of the amnesty scheme before September.
Earlier this month, PM Abbasi announced the tax amnesty scheme with an “aim of broadening the tax net and offering wealthy Pakistanis the option to declare their hidden assets in Pakistan and abroad”. Pakistanis having offshore assets can bring them back by paying only two per cent tax. However, in case of declaration of a foreign fixed asset only, tax applicability will be three per cent while foreign liquid assets including cash, securities and bonds can be declared on five per cent tax payment. The prime minister also offered to legalize the hidden local assets at five per cent.
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