According to the revised convention issued by the FBR, in no case shall the provisions of agreement be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person. Under the revised convention, the provisions of the said Convention shall come into force from November 29, 2018 and shall have effect in Pakistan for any fiscal year beginning on or after July 01 of the calendar year next following that of the entry into force of the Convention.
In respect of Article 25, the exchange of information will be applicable for information concerning facts that relate to any fiscal year beginning on or after the first day of January of the year next following the date of signature of the Convention, it added. Recently, Minister of State for Revenue Muhammad Hammad Azhar said that the government is seeking foreign bank accounts data of Pakistanis from 10 more foreign tax jurisdictions including Switzerland under the Organisation for Economic Cooperation and Development (OECD) arrangement.
The Swiss government is cooperating with the Pakistani tax authorities and Federal Board of Revenue (FBR) has already ratified the convention on the avoidance of double taxation between the two countries, he said. Hammad said, "We have made requests to 10 more countries for getting automatic exchange of information as so far we have received details about 150,000 bank accounts from 29 jurisdictions under Organisation for Economic Cooperation and Development (OECD) treaty. We have also made another request to Switzerland for sharing of exchange of information in January (last month) and they are willing to share data but so far it has not yet been operationalised." Under SRO 187(I)/2019 issued by the FBR, the revised agreement between Pakistan and Switzerland has specified revised Article 25 (exchange of information).
It said that the competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2.
Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use, it said.
In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation: a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).
If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations, but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information, it said.
In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person, revised Article 25 (exchange of information) of the convention added.
The protocol signed between Pakistan and the Swiss Federal Council notified under SRO 187(I)/2019 issued by the FBR revealed with reference to Article 25, it is understood that an exchange of information will only be requested once the requesting Contracting State has exhausted all regular sources of information available under the internal taxation procedure.
It is understood that the tax authorities of the requesting State shall provide the following information to the tax authorities of the requested State when making a request for information under Article 25: (i) the identity of the person under examination or investigation; (ii) the period of time for which the information is requested; (iii) a statement of the information sought including its nature and the form in which the requesting State wishes to receive the information from the requested State; FBR, Government of Pakistan; (iv) the tax purpose for which the information is sought; (v)to the extent known, the name and address of any person believed to be in possession of the requested information.
It is understood that the reference to "foreseeable relevance" is intended to provide for exchange of information in tax matters to the widest possible extent and, at the same time, to clarify that the Contracting States are not at liberty to engage in "fishing expeditions" or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer. While subparagraph (b) contains important procedural requirements that are intended to ensure that "fishing expeditions" do not occur, clauses (i) through (v) of subparagraph (b) nevertheless are not to be interpreted in order to frustrate effective exchange of information.
It is understood that Article 25 does not require the Contracting States to exchange information on an automatic or a spontaneous basis, neither does it prevent such forms of exchange of information if the Contracting States so agree later.
It is understood that in case of an exchange of information, the administrative procedural rules regarding taxpayers'' rights provided for in the requested Contracting State remain applicable. It is further understood that these provisions aim at guaranteeing the taxpayer a fair procedure and not at preventing or unduly delaying the exchange of information process, it added.
