Islamabad: UK tax authorities on Monday announced the pursuit of ‘only conditional’ further cooperation with Pakistan under the global ‘Tax Inspectors Without Borders (TIWB)’ initiative due to concerns about hurdles in the audit of multinational companies (MNCs) – a news source reported.
According to details, Pakistan risks losing the opportunity to catch a large number of tax evaders in case it fails to remove the said auditing impediments; which can consequently lead to a fallout in cooperation with Her Majesty’s Revenue and Customs (HMRC) – the kingdom’s official taxation authority. The said UK governmental department has been providing assistance to the Pakistani government on MNCs’ use of transfer-pricing information received under the Organization of Economic Cooperation Development (OECD)’s Country-by Country Reporting (CbCR) regime.
In case Pakistan is unable to remove these hurdles, it can face considerable difficulties in recovering evaded taxes from these multinational ventures.
The transfer pricing is the price at which the subsidiaries of MNCs sell and buy goods and services from the parent company. These numbers can be tweaked to show high costs; thereby facilitating tax evasion practices.
The OECD had started the TIWB initiative to enhance the tax audit capacity of its member countries and help them check this practice.
