ISLANABAD   -   Top economic mangers of the country would brief the federal cabinet on proposed tax amnesty scheme today (Tuesday).
“The Federal Board of Revenue (FBR) and Ministry of Finance will brief the cabinet on the proposed tax amnesty scheme,” said an official of the FBR on Monday. He further said that government is likely to issue Presidential Ordinance to announce the tax amnesty scheme after getting approval from the cabinet’s meeting. “The government is giving last chance to those people who had not declared their wealth to legalize it by paying nominal tax,” he added.
He said that government is already taking action against non-taxpayers and Benami properties and account holders. The FBR had issued notices to Benami account holders. Similarly, the FBR had issued notices to 6400 non-taxpayers in the first stage. Around 44,00 banks accounts had been attached and 78 properties and 46 vehicles would be auctioned. Meanwhile, FBR, in its drive to broaden the tax base of the country, has identified 6800 non-taxpayers in commercial plazas and shopping malls in three mega cities of Karachi, Lahore and Islamabad.
After the tax amnesty scheme, the FBR would expedite the process of taking action against non-taxpayers and Benami properties and account holders. The government prefers to announce the scheme through presidential ordinance because it would come into force immediately and would be easier to be passed by the parliament as part of the Finance Act 2019-20. The government had already delayed the Senate and National Assembly sessions.
The government is expecting to bridge the tax collection shortfall through amount generated under tax amnesty scheme. The FBR’s tax shortfall has gone up to Rs317 billion in first nine months (July-March) period 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 would help in reducing the tax collection shortfall and taking the FBR to reach its annual tax collection target of Rs4398 billion during ongoing fiscal year.
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 proceeds derived from the commission of a criminal offence are proposed to be excluded from the scheme.
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% to 10% 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 said 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 emphasise 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.