News Details
Press Release Date: 07/15/2018
Headline: Press Release Tax Amnesty-2018
Detail:

Government of Pakistan announced two tax schemes, namely, Foreign Assets (Declaration and Repatriation), Ordinance, 2018 for undisclosed income and domestic assets. However as required by the Constitution, both Ordinance were placed before the Parliament and through Finance Act 2018, these became Voluntary Declaration of Domestic Assets Act, 2018 for undisclosed income and domestic assets and Foreign Assets (Declaration and Repatriation) Act, 2018 for undisclosed foreign assets. These Acts were further amended through Presidential Ordinance on Jun, 30 2018.

The original closing date for filling declaration under the amnesty scheme was June 30 2018. It has been extended till July 31st, 2018 on account of representations from trade bodies, professional associations and general public due to short operational period after clearing legal and procedural challenges and problems faced by declarants in the payment of tax of foreign assets and repatriation of liquid assets. The Presidential Ordinance date June, 30th, 2018 amended the amnesty acts to extend the applicability date of the schemes and to include explanations on ambiguities such as exchange rate. The amendment Ordinance have also provided for revision of declaration. 

Public response to the schemes has been positive. So far, 55, 255 declarations have been file in which declared value of foreign assets in around Rs.577 billion and that of domestic assets in around Rs.1, 192 billion. Declarants have paid around Rs.97 billion out of which around Rs.36 billion have been collected on foreign assets and 61 billion on domestic assets. In addition, $ 40 million has been repatriated. This response to the amnesty schemes has been unprecedented.

Amnesty scheme for foreign assets applies to both liquid and immovable assets such as bank account, shares and mortgaged properties. Tax rates range from 2% to 50% depending on the type of asset. Special tax rate of 2% is applicable to liquid assets which are repatriated into Pakistan. The amnesty scheme for domestic assets covers all types of assets and income, with tax rates of 2% and 50%. To protect declarants from any harassment, both scheme under Voluntary Declaration of Domestic Assets Act, 2018 and Foreign Assets (Declaration and Repatriation) Act, 2018 promulgated on 8th April 2018 which eventually was made part of Finance Act 2018 to ensure complete confidentiality of declarant’s information. Moreover, such information cannot be used as evidence against declarants under any other law.

Finance Minister is closely monitoring the operation of the amnesty schemes and constantly advising both the FBR and SBP for improving payment procedures and ensuring effective facilitation. As per directions of the Finance Minister, FBR has set-up help lines, which operates 24/7 with dedicated telephone lines and e-mails for quick response to queries. FAQs, online user guide and all relevant documents have been published on FBR’s website (www.fbr.gov.pk) which is periodically updated on the basis of queries raised by intermediaries and delclarants. Frequent interaction with private sector including accounting professionals and tax practitioner bodies has been helpful. Similar arrangements have been put in place in SBP. The online user guide provides step by step information regarding registration under the amnesty scheme, procedure for payment of tax and submission of declarations. Officers well versed with the features of the amnesty schemes have been assigned the task of responding to queries. There is also a fully functional IT support team which regularly monitors online IT system. 

For payment of tax on foreign assets, State Bank of Pakistan has devised a procedure, whereby tax in USD is deposited into SBP’s accounts through wire transfer. Government has issued Government of Pakistan’s US Dollar Dominated Amnesty Rules, 2018, whereby SBP has been authorized to issue these bonds having a maturity period of five years and annual profit of 30% to be paid semi-annually. According to the rules, citizens of Pakistan can invest in these bonds out of remittances declared under the foreign amnesty or through encashment of foreign currency accounts held in Pakistan. 

The low rates of the Amnesty Schemes ranging between 2%-5% and is a major incentive for declaring undeclared assets and income. Pakistan has also become a signatory to the OECD Multilateral Convention which all provides access to information about offshore financial accounts of Pakistani residents held in the signatory countries. Necessary amendments have also been made in the Protection of Economic Reform (PERA) Act, 1992, to regulate FX movements and bring it in line with Income Tax Ordinance, 2001. Moreover, amendments have been made in the Income Tax Ordinance, 2001, whereby FBR may inquire about the source of foreign remittance above Rs.10 million and limitation of five years to probe foreign assets and income has been removed. 

Above all, revenues from the amnesty schemes will help in documents to official their assets. Equally critical is to support Pakistan in its endeavour, to reduce poverty and uplift its population which off-course depends on effective prioritization of development spending.                                                                                     ****











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