ISLAMABAD - The Federal Board of Revenue (FBR) has notified the establishment of Directorate General of International Tax Operation, which is supposed to impose and recover taxes from undisclosed offshore assets and income held by Pakistanis abroad.

“In pursuance of Finance Supplementary (Second Amendment) Act, 2019 a new Inland Revenue field formation namely Directorate General of International Tax Operation, Islamabad along with its Subordinate offices at Lahore, Peshawar, Multan, Karachi, Quetta and Islamabad (HQ) have been created,” said an official notification of the FBR. Under a major amendment in the Finance Supplementary (Second Amendment) Bill, 2019, the government had decided to establish Directorate of International Operations to exclusively deal with the cases of undisclosed offshore assets and income of Pakistanis held abroad.

According to the functions of the new directorate, Directorate General of International Tax Operations shall consist of a Director-General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint. The Board may, by notification in the official Gazette specify the functions and jurisdiction of the Directorate General and its officers and confer the powers of authorities specified in section 207 upon the Directorate General and its officers.

The functions and powers of the Directorate General of International Tax Operations included to receive and send information from other jurisdictions under spontaneous, automatic and on demand exchange of information under exchange of information agreements levy and recover tax by passing an assessment order under section 123(1A) in case of undeclared off-shore assets.

And incomes; receive, transmit and exchange country by country reports to the jurisdictions that are parties to international agreements with Pakistan and conduct transfer pricing audit in cases selected for such audit by the Director General of International Tax Operations.

The Board may, by notification in the official Gazette, specify the criteria for selection of the taxpayer for transfer pricing audit, amended bill added.

The Board may by notification in the official gazette specify the criteria for selection of the taxpayer for transfer pricing audit. For removal of doubt, the FBR has clarified in the approved finance bill that the transfer pricing audit refers to the audit for determination of transfer price at arm’s length in transactions between associates and is independent of audit under section 177, 214C which is the audit of the income tax affairs of the taxpayer.