Amnesty scheme generated Rs97b so far

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ISLAMABAD  –  The current tax amnesty scheme has generated Rs97 billion revenue for the government as 55,225 declarations have been filed so far.

“So far, 55,225 declarations have been filed in which declared value of foreign assets is around Rs 577 billion and that of domestic assets is around Rs1,192 billion,” the ministry of finance said on Wednesday. It further said that declarants have paid around Rs 97 billion out of which around Rs 36 billion have been collected on foreign assets and Rs 61 billion on domestic assets. In addition, $40 million have been repatriated. This response to the amnesty scheme has been unprecedented.

Sources informed The Nation that government is expecting to generate additional Rs60 to Rs80 billion in remaining twenty days of the scheme, as people are taking interest to declare their hidden assets by paying nominal tax. The scheme would expire by end of July.

The government in April this year had announced two tax amnesty schemes, namely, Foreign Assets (Declaration and Repatriation) Ordinance, 2018 for undisclosed foreign assets and Voluntary Declaration of Domestic Assets Ordinance, 2018 for undisclosed income and domestic assets. However, as required by the Constitution, both Ordinances were placed before the Parliament and through Finance Act 2018, these became Voluntary Declaration of Domestic Assets Act, 2018 for undisclosed income and domestic assets and Foreign Assets (Declaration and Repatriation) Act, 2018 for undisclosed foreign assets. These Acts were further amended through Presidential Ordinances on June 30th, 2018.

The original closing date for filing declarations under the amnesty scheme was June 30, 2018. However, it was extended till July 31, 2018 later.

The Presidential Ordinances dated June 30th, 2018 amended the amnesty acts to extend the applicability date of the schemes and to include explanations on ambiguities such as exchange rate. The amendment Ordinances have also provided for revision of declarations. Public response to the schemes has been positive.

Amnesty scheme for foreign assets applies to both liquid and immovable assets such as bank accounts, shares and mortgaged properties. Tax rates range from 2% to 5%, depending on the type of asset. Special tax rate of 2% is applicable to liquid assets which are repatriated into Pakistan. The amnesty scheme for domestic assets covers all types of assets and income, with tax rates of 2% and 5%. To protect declarants from any harassment, both schemes under Voluntary Declaration of Domestic Assets Act, 2018 and Foreign Assets (Declaration and Repatriation) Act, 2018 were promulgated on 8th April which eventually was made part of Finance Act 2018 to ensure complete confidentiality of declarant’s information. Moreover, such information cannot be used as evidence against declarants under any other law.

Finance minister is closely monitoring the operation of the amnesty schemes and constantly advising both the FBR and SBP for improving payment procedures and ensuring effective facilitation. As per directions of the finance minister, FBR has set up help lines, which operate 24/7 with dedicated telephone lines and e-mails for quick response to queries. FAQs, online user guide and all relevant documents have been published on FBR’s website (www.fbr.gov.pk) which are periodically updated on the basis of queries raised by intermediaries and declarants. Frequent interaction with private sector including accounting professionals and tax practitioner bodies have been helpful. Similar arrangements have been put in place in SBP.

The online user guide provides step by step information regarding registration under the amnesty schemes, procedure for payment of tax and submission of declarations. Officers well versed with the features of the amnesty schemes have been assigned the task of responding to queries. There is also a fully functional IT support team which regularly monitors online IT system.

For payment of tax on foreign assets, State Bank of Pakistan has devised a procedure, whereby tax in USD is deposited into SBP’s account through wire transfer. Government has issued Government of Pakistan’s US Dollar Denominated Amnesty Rules, 2018, whereby SBP has been authorised to issue these bonds having a maturity period of five years and annual profit of 3% to be paid semi-annually. According to the rules, citizens of Pakistan can invest in these bonds out of remittances declared under the foreign amnesty or through encashment of foreign currency accounts held in Pakistan.

The low rates of the amnesty schemes range between 2% – 5%. Pakistan has also become a signatory to the OECD Multilateral Convention which will provide access to information about offshore financial accounts of Pakistani residents from September 2018. This will enhance the capacity of FBR due to access to offshore financial accounts of Pakistani residents held in the signatory countries. Necessary amendments have also been made in the Protection of Economic Reform (PERA) Act, 1992, to regulate FX movements and bring it in line with Income Tax Ordinance, 2001.

Moreover, amendments have been made in the Income Tax Ordinance, 2001, whereby FBR may inquire about the source of foreign remittance above Rs10 million and limitation of five years to probe foreign assets and income has been removed.

Above all, revenues from the amnesty schemes will help in documentation of the economy as well as bring in onetime payment from non-declarant to officialise their assets. Equally critical is to support Pakistan in its endeavour, to reduce poverty and uplift its population which off-course depends on effective prioritization of development spending.

IMRAN ALI KUNDI

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