Declare local and foreign assets to ‘earn amnesty’ - GulfToday

Declare local and foreign assets to ‘earn amnesty’

Asad-Umer

The government would roll out a new tax amnesty scheme ahead of the next federal budget. File

Tariq Butt

ISLAMABAD: Finance Minister Asad Umar has announced that the government would roll out a new tax amnesty scheme ahead of the next federal budget for individuals to declare their local and foreign assets under the scheme.

It is also under consideration to allow public office-holders, including politicians and bureaucrats, to avail the amnesty scheme, Umar told reporters.

To a query about becoming one or two-tranche country after accepting tough conditions of the International Monetary Fund (IMF) programme, the finance minister said easy decisions could not fix the economy when there are massive deficits.

“The carrot and stick policy will be adopted but exact details of the amnesty scheme will be worked out. There are all kinds of strict laws and there is demand for providing last opportunity, so the amnesty scheme is under consideration.”

Umar said that there were many amnesty schemes which were brought in the country despite opposition extended by the IMF and World Bank. He said the compliance requirement of the Financial Action Task Force (FATF) related to ‘Know Your Customers’ (KYC) would be taken care of when the government would announce the tax amnesty scheme.

He also announced that withholding tax on banking transactions for non-filers would be abolished in the coming budget. The government, he said, would also withdraw ban on purchase of property for non- filers.

The minister also announced that the federal government, Punjab and Khyber Pakhtunkhwa (KP) would jack up valuation rates for real estate plots and then reduce the rate of tax. He said he would extend support to restoration of wealth tax and if there was a constitutional bar, then the provinces could move ahead.

In order to remove confusion on sending money abroad under the Foreign Exchange Regulation Act (FERA) and State Bank of Pakistan (SBP) limit, the minister said that the government would propose an amendment as many people sent out money beyond the limit of $5 million for investment purposes and buying flats by using the excuse in the name of FERA.

According to a report, nearly 81,000 individuals have deposited Rs1.67 billion in penalties and higher taxes to avail the government’s amnesty scheme for the closure of automatic audit.

The last date of the scheme was Feb.28, which was already extended by two months. The scheme was originally announced for Dec.31, 2018.

An official said that as many as 613,213 non-salary audit cases are still pending after the due date of the amnesty scheme. These individuals will have to face normal audit procedures, he said.

But it will be a big challenge for the Federal Board of Revenue (FBR) to prosecute such a huge number of audit cases owing to human resource problems and the government will have to offer some scheme to facilitate these individuals.

The FBR issued electronic audit notices to as many as 1,035,875 late filers since Nov 14, 2018 with a deadline to provide records, documents and books of their accounts. These taxpayers had submitted their returns for tax years 2015, 2016 and 2017 after the deadlines had passed in the respective tax years.

These cases included 342,314 salaried individuals and 693,561 non-salaried individuals including association of persons (AoPs) and companies.

The cases of 342,314 salaried individuals selected for automatic audit for late filing were settled without collecting penalty amount of Rs20,000. The penalty amount collected in few cases from salaried individuals will be adjusted against their tax liabilities in the current tax year.

For the non-salaried 613,213 individuals, the FBR had earlier given a deadline until Dec 31 which has now been extended to Feb.28.

The data showed that of the Rs1.67b deposited under section 214E of the scheme, the payments include a penalty amount of Rs593.6 million and approximately Rs1.08bn under other heads.

The city-wise settlement shows that Karachi has emerged the major beneficiary of the scheme. Around 24,430 individuals from the metropolis have availed the scheme by depositing an additional amount of Rs563.26m to close their audit cases.

A total of 18,709 individuals in Lahore closed their audit cases by depositing Rs473.15m. In Islamabad, 4,391 individuals paid Rs139.23m.

In Faisalabad, 5,206 individuals paid Rs76.96m, in Peshawar 2,364 individuals paid Rs71.68m where as in Quetta only 1,224 individuals opted the scheme by paying Rs14.17m.