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SBP Investigation shows Pakistani account holders transferred $15.25 billion out of the country

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According to a report submitted to the Supreme Court by a 12 member committee headed by the Governor of SBP, Tariq Bajwa, Pakistani account holders transferred USD 15.25 Billion through normal banking channels in the year 2016-17.

The committee was setup on the orders of Chief Justice Saqib Nisar to trace undeclared foreign assets by Pakistani citizens.

Key pointers from the court document:

  • Sum of $15.25 billion transfer during 2016-17
  • Individuals account holders transfer huge amount through banking channels
  • A substantial also transferred through abroad through hundi and hawala
  • Information part of report submitted to Supreme Court
  • 12-member committee of experts headed by SBP submits report
  • Committee constituted by on orders of three judge SC bench headed by Chief Justice
  • Committee tasked to trace assets and bank accounts stashed abroad by Pakistanis
  • Court initiated suo motu pertaining to illegal transfer of money
  • Committee stated outflows had huge impact on the stability of the country’s foreign exchange reserves
  • Outflows adversely affected the exchange rate of the Pakistani rupee
  • Trend could cause undue and disruptive inflation

The Committee delineated the following factors caused substantial foreign exchange outflows from Pakistan:

  • Cash feeding of foreign currency accounts and the immunity of such transactions and the movement of funds deposited in foreign currency accounts.
  • Free cash movement of foreign currency of any amount within and out of Pakistan
  • Laxity in the regulatory framework for the retained portion of export proceeds facilitating leakage and the accumulation of undeclared assets abroad.
  • Under invoicing and over-invoicing in foreign trade transactions.
  • Remittance through normal banking channels as black money stashed abroad could be whitened without payment of tax
  • The Hundi and Hawala means of foreign currency transfers have remained available in the market for transfer of ill-gotten or tax evaded funds.
  • Short limitation periods in tax laws for initiating legal action against tax evaders and defaulters have blocked assessment and recovery of tax on global income and wealth of citizen.
  • Scant bilateral tax treaties with other countries for exchange of information have hampered detection of foreign assets accumulated by citizen.
  • Lacunae in tax laws and regulations have enabled avoidance of tax on technical grounds.
  • Failure of the present income and wealth tax declaration forms to require disclosure of foreign assets and income of citizen.
Posted on: 2018-06-23T14:41:00+05:00