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Quoting informed sources, a Recorder Report appearing on Tuesday revealed that the national tax conference at the Federal Board of Revenue (FBR) on Monday remained engaged in discussions on whether or not to legalise the concealed assets of a Lahore-based person who tried to avail himself of the Investment Tax Scheme-2008, against payment of Rs 20 million.
Perhaps, the confusion in the matter had arisen over the enormity of concealment/under-reporting of his assets, as the whitening fee in such cases has been placed at 2 percent of the fair market value. An ambiguity might have been noted on the stipulation in the law that amnesty would be allowable against declaration of evasion on own volition of the amnesty-seeker, and not in the aftermath of its detection by the department.
For, as the news report has also stated, that some of the officials were of the view that there was no bar on allowing amnesty to a person for legalisation of un-disclosed assets. It will thus be noted that the bone of contention in the discussions was validity of amnesty after detection of what may be described as wilful concealment.
Be that as it may, some idea of the extent of confusion may be had from the resort to seeking legal opinion under the Income Tax Ordinance 2001. Moreover, reference also seems to have been made to the discretion to work out fair market value of the undisclosed/unexplained assets has been given to the taxpayers under the Investment Tax Scheme-2008 to avoid valuation related complications.
It will, however, be recalled that while the main objective of the Investment Tax Scheme (ITS) 2008 was widely viewed as broadening the tax net, certain sections of tax consultants expressed apprehensions about the success of the scheme, which had put a condition of paying two percent investment tax on fair market value of assets at the time of declaration of all moveable and immovable, undisclosed and unexplained investments and assets.
At the same time, however, the scheme launched vide FBR circular No 3 of 2008 dated July 1, 2008, was also described by some experts as being helpful in broadening the tax net and improving the tax-to-GDP ratio, which stood at around 12 percent.
As against this, some others had reservations on this point, arguing that the condition laid on amnesty, could cause hassles for taxpayers, who may be reluctant to avail themselves of the scheme as the FBR had not laid down the parameters for determining the fair price of the assets.
Citing past schemes, it was also maintained that the FBR invariably issued guidelines for determining the value of moveable and immovable assets. Many and varied may be the arguments for and against the present scheme, but the undeniable fact remains that amnesty continues to be completely out of the question after detection of the concealment, for which there is no provision whatsoever.

Copyright Business Recorder, 2008

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