Tax amnesty scheme is a limited-time opportunity for a specified group of taxpayers to pay a defined amount, in exchange for forgiveness of a tax liability (including interest and penalties) relating to a previous tax period or periods and without fear of criminal prosecution.

It typically expires when some authority begins a tax investigation of the past-due tax. In some cases, legislation extending amnesty also imposes harsher penalties on those who are eligible for amnesty but do not take it. Tax amnesty is one of voluntary compliance strategies to increase tax base and tax revenue. Tax amnesty is different from other voluntary compliance strategies in part where tax amnesty usually waives the taxpayers tax liability.

Amnesty scheme in any fiscal year is to help State treasury raising tax revenues, adding beneficiaries in tax base who have not declared their assets previously. The main purpose of inception of this scheme is to replicate the economy and encouraging individuals to declare their wealth as it may arises. Under this scheme the beneficiary just has to pay some tax on the total assets which are declared in Amnesty scheme. State introduces this scheme when they believe that individuals are hiding their wealth from the tax authorities. Federal Government of Pakistan recently announced a tax reform package and amnesty which is expected to overhaul and change the entire taxation system in Pakistan.

The tax package revolves around five major points:

First is that CNIC numbers to be made NTN numbers to monitor tax compliance of all citizens.

Second is Income tax brackets and percentages to be revised. Filer must complete tax exemption on annual income up to Rs1.2m; maximum percentage of 15pc to be levied on income above Rs4.8m per annum.

Third point is that Undeclared assets held locally or abroad to be declared after payment of nominal penalties. Those who avail this scheme are to be granted one-time exemption from accountability laws.

Fourth point is tax to be collected on all property transactions to be made uniform (1 percent federal and 1 percent provincial tax). Government will have the right to purchase any property by paying 100pc over and above its declared value within six months of its registration.

And last but not the least, the government has right to monitor citizens financial records and issue notices if they find evidence of tax evasion then penalties are to be decided.

In my personal opinion it is a very positive and bold step taken by the Government and will have outstanding results in the future. Usually everyone holding black money will either keep it in cash or will get it white by using the usual Telegraphic transfer procedure by paying 5 to 7 percent on the said amount. The Government reduced the penalty to only 5percent thus encouraging all who have undeclared money to become part of Tax net. So let’s assume you have 200 millions undeclared assets, you can simply pay 10 million and declare all your money to the Government for future transactions and not only you become a filer but you also never have to worry about your undeclared money anymore.

The State Bank of Pakistan gives statement that $300 million tax has been fetched under the tax amnesty scheme launched by the previous government in April this year for whitening their undisclosed assets held overseas. The International Monetary Fund (IMF) has assessed Pakistan’s gross external financing needs at a record $27 billion for the next fiscal year, but warned that arranging the financing at favorable rates will now be a challenge due to risks to the country’s debt sustainability.

In its post-programme monitoring report, the IMF also forecast that due to additional borrowings, Pakistan’s external debt would jump to $103.4billion by June 2019, up from this June’s projected level of $93.3 billion. The Pakistan Economy Watch (PEW) said the tax amnesty scheme has not been designed to benefit tax dodgers but orchestrated to save the country from another loan by IMF on harsh conditions.

A formal request by Pakistan for an IMF loan will be an opportunity for the IMF which has been humiliating and penalizing Pakistan for its failed policies. The amnesty scheme will not damage the economy while IMF’s loan will not be without acceptance of harsh economic and political conditions, In its first post-programme monitoring (PPM) after the completion of fund programme in September last year, the IMF board also raised questions over the medium-term debt sustainability and called for additional revenue measures and containing expenditures. And it will keep raising questions and keep pointing fingers in our policies unless we don’t pay him back.

Moreover this is a golden opportunity and if you do not avail it then we will be at loss in future. Only 58000 payers are taking benefit of this scheme whereas when Indonesia introduced this scheme more than 965000 people became tax filer.

Although it is a very good scheme and people should took more benefit from it. But people are still hiding their property and also keeping their money in foreign banks. On other hand people are still scared of FBR and other government employees and government institutes like National Accountability bureau. That is why they are not taking part in this scheme which is ultimately making us head toward IMF loans and involvements. Moreover Lahore FBR is fully interested to bring more profit in tax net and to be the helpful for Pakistan to get rid of very strict policies of IMF.

Only this way we secure our GDP and economy. In this regard Chief commissioner Syed Nadeem Rizvi remained in his office to super monitor the above scheme till late nights and tried their level best to facilitate tax payers, to enhance the value of this amnesty scheme, prepare promotional items and held corner seminars in his office to help this scheme get successful. Although it’s a great devotion to keep far Pakistan from the cruel policies of IMF.

FBR should be appreciated by prime minister of Pakistan because these types of schemes are beneficiary for the better growth and maximum circulation of rupee in to the markets and abroad. So I do recommend that if you have undeclared assets this may be the right time to declare it. Most importantly this scheme is not applicable to people holding public service offices, their spouses and dependent children. Therefore it is basically meant to bring the culture of taxation among general citizens, businessmen and industrialists. Moreover the tax collection should be used in proper manner and should be able to get enhanced by Accountability.