ISLAMABAD - With the National Assembly in session, the proposed tax amnesty scheme is likely to delay for another two weeks as presidential ordinance cannot be promulgated during the session of the lower or upper houses of the parliament.

The government, keeping in mind its thin majority in the parliament and time constraint, had planned to introduce the scheme through an ordinance. However, the National Assembly’s session started on Monday and would continue till May 3. The government had already delayed the National Assembly’s session till April 22 from scheduled date of April 12 in a bid to introduce the scheme through an ordinance. The scheme could not be presented through an ordinance till May 3.

The federal cabinet in its two meetings last week had failed to approve the scheme owing to differences among ministers on the scheme. Later, Prime Minister Imran Khan replaced the former finance minister Asad Umar with Abdul Hafeez Shaikh, who has been given charge of adviser to prime minister on finance, revenue and economic affairs. The government wanted that tenure of the amnesty scheme should not go beyond June 30, end of current fiscal year. On the other hand, the scheme has to be concluded before start of the IMF programme, as the Fund usually dislikes tax amnesty schemes. Abdul Hafeez Shaikh had, reportedly, has expressed his disagreement with some of the points of the tax amnesty scheme that was approved by Asad Umar. During a meeting on Sunday, Hafeez instructed Federal Board of Revenue (FBR) to fine tune the scheme to make it simple to understand and easy to implement. He also emphasised that objective of the scheme should be to make economy more tax compliant and documented. Hafeez has reportedly turned down the proposal to introduce six types of tax rates for various categories of assets. He has asked to reduce tax classifications to only two.

Hafeez has turned down the proposal to introduce 6 types of tax rates

Sources in FBR and Ministry of Finance informed that there was no other point of disagreement from the advisor on tax amnesty scheme. He had asked FBR officials not to present scheme in a hurry. The proposed tax amnesty scheme would be presented to prime minister for approval after incorporating suggestion of Abdul Hafeez Shaikh, said one official of the FBR. Shaikh has also wanted it to be simplified and presented to a larger group for consultations on Tuesday. 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. Meanwhile, the business community has also asked the government to take them on board on proposed tax amnesty scheme to make it successful. “The government should take all major trade bodies and business associations fully on board by engaging them in consultation before formal launch of amnesty scheme to ensure that it will yield maximum benefits to the economy,” said President (ICCI) Ahmed Hassan Moughal in a statement.   The main reason of their failure was that thorough consultations with stakeholders were not held. He said that 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, Rs10 billion in 2000, Rs.3.16 billion in 2008 and around Rs.120 billion in 2018.