Pakistan

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Overall Phase 2 Rating is Largely Compliant

Table of Determinations and Ratings of the Phase 2 Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Partially Compliant.  Ownership information on certain companies and partnerships is available with financial institutions, if engaged by the company or partnership, or with the entities themselves. However the low compliance rate with filing obligations in combination with limited inspection of ownership information and enforcement (which also does not include striking off of non-compliant entities) do not ensure that the information is available as required under the law in all cases.  Pakistan should take measures to ensure that ownership information in respect of the relevant entities is practically available as required under the international standard. 
Information required to be held by trustees is mainly supervised by AML supervisory authorities, however, the supervisory and enforcement system has not yet been set up for trustees who are not financial institutions.  Pakistan should take the necessary supervisory and enforcement measures to ensure that information on settlors and beneficiaries of trusts operated by Pakistan resident trustees is available in all cases. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  Although Pakistani authorities carry out supervisory and enforcement measures focused on availability of accounting information these do not result in sufficient levels of compliance to ensure that the relevant accounting information (including underlying documentation) is in all cases available in practice.  Pakistan should take further measures to ensure that accounting information in respect of the relevant entities and arrangements is practically available as required under the international standard. 
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.   Out of Pakistan’s 65 EOI agreements four do not meet the international standard and only one contains OECD model wording including Articles 26(4) and 26(5).  Pakistan should continue to renegotiate its older treaties and bring all of them in line with the international standard. 
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.     Pakistan should continue to develop its network of EOI mechanisms with all relevant partners. 
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   A small number of Pakistan’s DTCs may allow disclosure of exchanged information which goes beyond the standard.  Pakistan should ensure that all of its agreements meet the standard concerning confidentiality of information received. 
Confidentiality rules regarding information exchange under Pakistan’s agreements are not unambiguously provided in cases where there is a contradiction between section 216(3) of the Income Tax Ordinance and the treaty under which the information is exchanged.  Pakistan should remove any potential ambiguity concerning confidentiality rules applicable to exchange of information under its agreements. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
   
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Partially Compliant.  Pakistan was not able to respond in a timely manner in several cases with half of the requests responded to after a year. The main deficiencies relate to handling of requests at the local level and lack of rigorous monitoring and follow-up action by the FBR in cases where information is not provided within the prescribed deadline.  Pakistan should limit any unnecessary delays in obtaining and providing the requested information so that it improves the timeliness of its responses. 
Pakistan recently introduced new measures to improve its EOI processes including obligation to systematically provide status updates. However, certain improvements should continue to be done to ensure that the requested information is provided in a timely manner.  Pakistan should monitor recently introduced measures and take further action where necessary to ensure that responses are provided in a timely manner. 

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.