ISLAMABAD  -     The government is expecting to overcome tax collection shortfall through the amount generated under a tax amnesty scheme, which is likely to be announced next week through a presidential ordinance.

“The tax amnesty scheme will be announced after Finance Minister Asad Umar return to Pakistan from Washington,” said an official of the Federal Board of Revenue (FBR).

He said the government would announce the scheme through a presidential ordinance. “The government will generate from Rs150 to Rs200 billion if the scheme is successfully implemented,” he said. However, he clarified that government was giving a chance to people to declare their hidden assets by paying nominal tax.

The tax shortfall has gone up to Rs317 billion in the first nine months (July-March) of the current fiscal year as the tax collection machinery collected Rs2,681 billion against the desired target of Rs2,998 billion. The proposed amnesty scheme will help FBR reduce tax collection shortfall and meet its annual tax collection target of Rs4398 billion during ongoing year.

Finance Minister Asad Umar said on April 2 that government was considering announcing a tax amnesty scheme before June in a bid to give an opportunity to people to disclose their local and foreign hidden assets by paying tax.

 “We have several representations from all quarters, asking for one-time relaxation for those who have not declared their assets,” he said.

The government may issue the Foreign Assets (Declaration and Repatriation) Ordinance, 2019 for undisclosed foreign assets and Voluntary Declaration of Domestic Assets Ordinance, 2019 for undisclosed income and domestic assets.

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.

For credit entries in Benami bank account, the tax rate may be proposed at 2 percent of the total credit entries from July 1, 2017 till April 15, 2019 or 10 percent of peak credit entries during the period whichever is higher. For any other assets, the tax rate may be proposed at 7.5 percent of the prescribed value. The implementation strategy may cover ownership by leadership and emphasis that it’s the last chance, followed by full scale prosecution, a media campaign and an enforcement drive with the assistance of banks and Nadra.