ISLAMABAD: Senate Standing Committee on Finance Monday reversed their opposition to legal revisions recommended by the Organisation of Economic Cooperation and Development (OECD), so permitting the government to tax overseas companies including tech giants.
The Senate panel on finance held a second round of deliberation regarding the revisions proposed by the government, reported Express Tribune.
The committee presided over by PPP Senator Farooq H Naek gave go-ahead to three of four changes proposed by OECD for revising fiscal laws which would permit action on foreign entities indulging in tax avoidance.
But one proposal was struck down by the committee which would have allowed the Federal Board of Revenue (FBR) to declare any business transaction bogus due to its wider ramifications on domestic businesses.
The other three revisions got the backing of the Senate panel which included revisions which would permit the tax regulator to tax technology behemoths Facebook, Google and Amazon and garner its due share of taxes via profits generated by multinational entities and those belonging to overseas Pakistani’s.
Pakistan recommended a 5 percent tax on digital revenues, hitting US tech giants like Google, Amazon and Facebook.
The Senate panel changed its point of view on this issue once FBR Inland Revenue Policy Member Dr Mohammad Iqbal apprised them the reason for incorporation these measures in the Finance Bill 2018.
Mr Iqbal shared these revisions constituted part of OECD’s Base Erosion and Profit Shifting (BEPS) which were targeted at acting against tax avoidance by big foreign entities.
He added after approval of these revisions the country’s laws were now in tandem with OECD rules and regulations.
A recommendation to levy 3 percent tax on credit card transactions conducted abroad by Pakistani’s was also rejected by the Senate panel.
Also, another legal revision would see a Pakistani national has 50 percent or higher capital, voting rights directly or indirectly in an overseas company, its income would also be subject to tax.