ISLAMABAD - The government on Wednesday announced its strategy to investigate the investment or income of the Pakistani residents in offshore companies, revealed in the Panama Papers.

Minister for Finance, Revenue, Economic Affairs, Statistics and Privatization Muhammad Ishaq Dar in his reply told the National Assembly said that FBR is obtaining information and documentary evidence about the investment or income of the offshore companies of Pakistani residents, which will be cross matched with the database of FBR and the taxpayers record.

If the accused (mentioned in the Panama papers) has not mentioned the offshore investment or income in his returns to FBR, he will be issued a show cause notice to explain the sources of investment and income derived there-from, if any evasion of tax is detected, the relevant laws would be applied accordingly to retrieve the loss of state revenue, Dar wrote in his reply.

He explained that Securities and Exchange Commission of Pakistan (SECP) has initiated investigation into the offshore companies but found that no direct investment has been made in offshore companies given in the Panama Papers, registered in Pakistan relating to identified persons.

Dar said, the investments mentioned in the Panama Papers were made by the persons in their individual capacity and same has not been routed through the company’s account.

He said certain companies have entered into transactions with companies registered in foreign jurisdictions, which is not prohibited as per Pakistani law (Companies Ordinance, 1984).

The SECP has initiated correspondence with such companies and necessary legal proceedings would be initiated in accordance with relevant provision of the law in case of non-compliance.

“In order to handle such matters on immediate basis, special provisions to maintenance of record of foreign investment in shape of Companies’ Global Register of Beneficial Ownership has been introduced in the Draft Companies Bill, 2016”, the minister said.

However, he clarified that if any Pakistani national shifts his after-tax money from Pakistan and forms an offshore company in any foreign country, including tax haven such as Panama, for benign and legal business purpose, there would be no illegality.

However, if any resident has shifted his hidden or untaxed money from Pakistan through covert or illegal channels and formed an offshore company for the purposes of tax avoidance or money laundering, then it would certainly be treated as an illegal action.

Names of hundreds of Pakistanis with links to offshore companies had surfaced this year, in one of the world’s biggest ever data leaks made public by the International Consortium of Investigative Journalists (ICIJ).

This news was published in The Nation newspaper. Read complete newspaper of 11-Aug-2016 here.