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New tax amnesty scheme

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First tax amnesty scheme for whitening of unrevealed expenditures, sales and assets, as well as foreign assets, at nominal tax rates introduced. The scheme has come into influence as a result of presidential ordinance, which will provide a period of at least 45 days to people for statement of their unregistered assets, expenditures, and sales along with payment of taxes before June 30 that same year. The scheme was chaired by Prime Minister Imran Khan. The plan can be benefited by all companies like associations of persons and individuals only to whiten their assets, expenditures and sales not testified before June 30, 2018. There is no specification for whitening unrevealed incomes as well as domestic and foreign. The government has permitted another one-year period to people for payment of taxes with excess different default surcharge rates on a quarterly basis as far as June 30, 2020. This facility will be open to only to those people who will first affirm their assets until June 30, 2019.The whitened cash assets will have to be kept in Pakistani bank accounts. For people desiring to keep their whitened money abroad, a rate of 6 percent will be charged. There will be minimum 50 percent of the FBR-assigned value to bring it similar with the market rate. Similarly the FBR value has not been informed or less than the DC rate. Further under the current scheme, the persons are also allowed to increase the declared value of immovable property. The tax rate will be 1.5 percent for whitening of domestic immovable properties. Against of foreign assets, the just market value will be decided at the exchange rate prevalent on the date of announced. The tax rate on sales or supplies is 2 percent, which is also offered for the first time for closer together undeclared sales into the tax net. The government is taking into account reassuring people to repatriate their assets in dollar as well as in Dirham through a UAE-based bank. The scheme cannot be utilized by the holders of public officials including president, prime minister, chief ministers, governors, Chief Justice of Pakistan, judges, their spouses or government-owned company. It will also not apply to gold and costly stones, bearer prize bonds, bearer securities, shares, certificates, bonds or any other bearer assets. The amnesty scheme is not obtainable to any official holder since May 15, 2009.It will not be applicable to any proceeds or assets that are concerned in or taken from the commission of a criminal insult. It will also not apply to proceedings awaiting in any court of law. It is obligatory for the person availing the scheme to file income tax returns for the tax year 2018 or revised return, the financial statement and wealth statement. Under the scheme, the cash declared will have to be deposited into a bank account. The foreign currency held in Pakistan may be deposited into the declarant’s bank account. The amount will be maintained in the bank account till June 30, 2019.The foreign assets repatriated to Pakistan will be deposited into own bank Pak rupee account or his foreign currency bank account in Pakistan or invested in Pakistan Banao certificate or foreign currency-denominated bonds. The foreign liquid assets not repatriated to Pakistan will be deposited in declarant’s foreign bank account on or before June 30, 2019.
The fundamental purpose of the scheme was not to create revenue but to document the economy and to bring lifeless assets into the economy and make them functional. The main reason behind the plan is not to bring fear among people but to boost businessmen to participate in the legal economy. This scheme is different from the ones offered in the past, is that unlike the past schemes, the one being introduced now made it obligatory for the people declaring assets to become tax filers. The scheme was not being offered to create revenue and contained an alternative for business people to revise their balance sheets. People will now be required to deposit all of their cash in hand into the bank and declare it along with the deposit slip as proof. The government’s top financial adviser said that the federal cabinet has approved the amnesty scheme to whiten the black money. This scheme will not be relevant to salaries but only on the expenditures and properties. The new scheme is targeted at documentation of the economy. Many businessmen have praised this most needed drive to start economic activities, which suffered immensely during general elections last year. A less number of them have expressed worries and have demanded the government to take tangible steps and take long-term policies so the black money does not negatively influence the country.
The IMF conditions were in the benefit of Pakistan. The demands of the IMF to reduce debt and expenditures, increase revenues and bring improvement in the debt system are also in the benefit of Pakistan. Approaching the IMF was not something fresh. The basic defect of the economy needed to be addressed to get eliminated of the IMF permanently. To avoid the IMF permanently these flaws would have to be corrected. If these defects are not addressed then there will be again the need to approach the IMF. In the past some improvement was noticed for a short period of time but afterwards issues rose again.