Pakistan approves first tax amnesty scheme with June 30 deadline
Scheme will help people to disclose hidden assets legally — economic adviser Abdul Hafeez
Islamabad: The Pakistan government has announced a new tax amnesty scheme on Tuesday to offer non tax filers an opportunity to come clean until June 30. The scheme was approved at a cabinet meeting chaired by Prime Minister Imran Khan.
Dr Abdul Hafeez Shaikh, adviser to the prime minister on finance, said the scheme is people-friendly, easy to understand and implement with realistic goals. “The objective of the scheme is not to generate revenue but to make the economy more tax-compliant and documented and encourage businessmen to participate in the legal economy,” he said. All Pakistani citizens can avail the scheme except for those holding public office.
Federal Board of Revenue (FBR) chairman Syed Shabbar Zaidi, Minister of State for Revenue Hammad Azhar, and Special Assistant to the PM on Information and Broadcasting Dr Firdous Ashiq Awan accompanied Dr Shaikh at the press conference.
Under the scheme, the assets within the country and abroad can be regularised after paying a certain amount. For legalising of properties, the value will be considered 1.5 times more than the FBR-assigned value. A rate of 4 per cent will be charged for legalising Benami assets (undisclosed assets) within the country while 6 per cent would be charged from those who want to park their money abroad. The wealth that remains undeclared after the deadline would be confiscated and defaulters could also face prison time, the adviser said.
The tax scheme has been announced as Pakistan is set to receive a $6 billion bailout package from International Monetary Fund (IMF) over a period of 39 months after several months of negotiations. This is country’s 13th bailout in the last three decades as the economy has been struggling due to fiscal challenges, rising inflation, low exports and dwindling foreign reserves.
The IMF package, however, would not burden consumers using below 300 units, Dr Shaikh clarified. “About 75 per cent of the electricity consumers and 40 per cent gas users will not be affected by the new taxes.” Meanwhile the government has allocated Rs180 billion (Dh4.6 billion) to assist the poor families and Rs800 billion would be allocated for the development funds in the next budget.
According to the Minister of State for Revenue Hammad Azhar, the new scheme is different from the ones offered in the past, as all those declaring their wealth for the first time would become income tax payers.
The previous PML-N government announced four such schemes to different groups that fetched around Rs121 billion and brought about 80,000 people into the tax net.
Tax collection has always been a challenging task for Pakistan where only 1.4 million file their annual income tax returns in a country of 200 million. Besides Pakistan, this strategy of offering limited-time opportunity to regularise undeclared and untaxed assets has been used in different countries including the United States, Australia, Belgium, Canada, Germany, Greece, Indonesia, Italy, Malaysia, Portugal, Russia, South Africa and Spain.