ISLAMABAD: The Federal Board of Revenue (FBR) has evolved common reporting rules for the banking sector to bring it on a par with International Reporting Standards (IRS) for the exchange of financial information about bank accounts of non-residents with the Organisation for Economic Cooperation and Development (OECD) nations.

The move is aimed at reducing the possibility of tax evasion.`We have notified the new rules for the common reporting system to the banking sector,` a senior tax official told Dawn on Friday.

In September 2016, Pakistan signed the Convention on Mutual Administrative Assistance in Tax Matters, which paved the way for the exchange of information regarding offshore accounts. The need for signing the law was felt in the wake of Panama Papers case.

The of ficial said evolving rules for the banking sector is the first step towards the implementation of the multilateral convention on tax evasion. These rules provide for the exchange of non-resident financial account information with tax authorities in the account holders` country of residence.

The new rules will be communicated to banks to seek all information from non-residents who keepbank accounts in Pakistan. Those people who do not provide details to banks will be subject to penalties under Income Tax Ordinance 2001.

The new rules will empower banks to submit a report to the FBR field formation regarding non-compliant non-residents.

To comply with the convention in the first year of its implementation, Pakistan will have to provide information of non-residents with bank accounts in Pakistan during July 1 and December 31 of the current year to 105 members of the OECD treaty.

The information will be regarding those non-residents who will open their banks accounts in Pakistan during the six-month period. There is no cash limit for bank accounts of non-residents during this period.

Contrary to this, bank accounts of non-resident individuals that were opened in Pakistan prior to July 1, 2017 with more than $1 million will also be shared with OECD treaty members.

The deadline for the sharing of information with OECD countries for the first year will be September 2018. Pakistan will be bound to share information of non-residents within a period of nine months after the completion of a calendar year.

`We have held several meetings so far with banks` representatives to sensitise them to the requirements of the automatic exchange of information of bank accounts under the convention,` the official said. The government has already introduced amendments to Income Tax Ordinance 2001: Section165B was introduced in the ordinance about the sharing of bank account details of non-residents with their countries of origin. A centralised system will be establishe d in FBR Islamabad at a cost of 500,000 pounds to collect data from all banks. The software will automaticallyshare bank account details of non-residents with their countries of origin.

Initially, four to five commissioners of Inland Revenue will be posted as focal persons for collecting data from banks regarding non-residents, the official added.