The government has overnight issued a new presidential ordinance for companies or investors who invest in offshore companies or receive investment from foreign companies. The Ordinance would bind the directors and company’s owners to reveal minor details such as who is the beneficial owner of this company and who is reaping the profit. The issuance of this new Ordinance is such sudden and untimely that no one had expected it.
The new section which is section 452 introduced in the 32 years old Companies Ordinance 1984 would bound the company owners to reveal about all the offshore investments and real beneficial owners of these investments. Authority to implement and enforce this law would rest with the SECP which would issue a form that would ask necessary details from the companies. SECP has already sent more than 70,000 notifications to notify the businesses about this new ordinance.
Experts say that law would not only allow making more accurate estimates about the economy, but it would also bring more people in the tax net. At the same times, many critics say that new section shouldn’t have been introduced in Companies Ordinance rather it should have been an addition to the Tax Law. Further, the law also gives too many additional authorities to the SECP.
Well, it is astonishing to see such ordinance in the time when entire buzz in the country roams around the Panama leaks and benefits gained by Pakistan’s ruling family from offshore companies. The very nature of law is precisely opposite to the Sharif family as its implementation would further increase complications for them or may make the SC question the family’s offshore properties according to the new law.
Still, the effective implementation and enforcement of the law remain a big issue, because already there exist sufficient tax laws in Pakistan; still, a big amount of corporate tax remains missing from facts and figures of the economy.