ISLAMABAD   -   The government is trying to convince International Monetary Fund (IMF) on its tax amnesty scheme by saying it would help broaden tax base and documented the economy.

The IMF usually opposed the tax amnesty schemes. Such schemes, according to IMF, usually are not successful in mobilising revenues to the moral of obliging taxpayers.

The government of Pakistan has proposed the tax amnesty scheme when it is holding talks with the IMF for new loan programme.

“We hope that IMF will support our tax amnesty scheme, which will help in documented the economy and broadening of tax base,” said an official of the ministry of finance.

He further said that scheme would also help in generating revenues, which is one of the IMF major demands to increase the tax collection.

The IMF has asked Pakistan to increase the tax collection target to Rs5.4 to 5.5 trillion in next fiscal year by taking additional tax revenue measures of Rs600-Rs700 billion in upcoming budget.

According to the IMF, the official said, the budget deficit could not be controlled without massive taxation.

The government had planned to introduce the tax amnesty scheme through Presidential Ordinance in mid April.

However, the scheme was not approved by the cabinet due to the differences of cabinet members and then finance minister Asad Umar.

The proposed scheme would cover declaration of undisclosed assets, Benami assets, sales and income on or before 30th June, 2018. Tax rates range from 5 percent to 10 percent with certain exceptions. The assets will be valued at prescribed rates.

Benami property declarations to be allowed, while foreign assets to be converted into money and remitted to rupee accounts in Pakistani banks/deposited into declarant’s own foreign currency bank account in Pakistan.

Under the draft scheme, the rate of tax for Benami assets may be 10 percent while for foreign liquid assets repatriated into Pakistan, the tax rate may be 5 percent.

In case of credit entries in own bank account, the tax rate may be one percent of the total credit entries from July 1, 2013 till June 30, 2018 or 10 percent of the peak credit entries during the said period whichever is higher.

According to the some details, successive governments in Pakistan introduced many amnesty schemes from 1958 to 2018 that could not generate significant amount of tax revenue for the country.

Amnesty scheme launched in 1958 recovered Rs.1.12 billion from undeclared assets followed by Rs.920 million in 1968, Rs.1.5 billion in 1976, Rs.10 billion in 2000, Rs.3.16 billion in 2008 and around Rs.120 billion in 2018.