Federation of Pakistan Chamber of Commerce and Industry (FPCCI) presented three major changes in the tax policy before the Federal Board of Revenue (FBR) - introduction of the amnesty scheme for legalization of undisclosed income, assets and wealth on payment of nominal amount of tax.
The sources told Business Recorder on Thursday that the idea of the amnesty scheme was floated by the representatives of the FPCCI before the tax authorities in a recently held meeting at the FBR House. FPCCI has proposed three major changes in the tax policy:
Firstly, the FBR should defer the implementation of the documentation measure under of SRO 821(I)/2011 till June 30, 2012. In this case, the FBR may not be able to obtain computerised national identity card (CNIC) numbers or national tax numbers (NTNs) of unregistered wholesalers, distributors and dealers etc from manufacturers provided the Board is ready to defer this documentation measure till June 30, 2012. Secondly, during the period of deferment of the SRO 821(I)/2011, the FBR can announce an amnesty scheme for the period of April, May and June 2012.
The proposed amnesty scheme would allow legalization of the undisclosed assets and income on payment of a certain percentage for whitening the unexplained assets. The proposed amnesty scheme would also give immunity from audit under section 177 of the Income Tax Ordinance 2001 to those who would be ready to disclose their explained assets and income.
Thirdly, an alternate proposal has also been given by the FPCCI to constitute a committee including representatives of the FPCCI, tax officials and tax experts to workout the methodology for the introduction of the amnesty scheme. If the FBR agrees to any such kind of amnesty scheme, the Board would issue an income tax circular for the implementation of the scheme. Fourthly, the FBR can implement the documentation measure under SRO 821(I)/2011 from July 1, 2012 subject to the acceptance of the above said proposals, sources added.
Sources added that the FBR would give its comments on these proposals in another meeting between the FBR and the FPCCI to be convened next week. In the past, the FBR had applied exceptionally low tax rate of 2 percent for the legalization of the un-disclosed assets and income as compared to higher rates for individuals and companies under the income tax law. The government had allowed legalization of un-disclosed foreign currencies on payment of 2 percent tax under the Investment Tax Scheme, 2008 providing an excellent opportunity to disclose unexplained currencies.
The black money amounting to Rs 21 billion was legalised through Investment Tax Scheme. The government had allowed legalization of undisclosed foreign currencies on payment of 2 percent tax under the Investment Tax Scheme, 2008. The Investment Tax Scheme was a first of its kind of scheme where discretion to workout fair market value of the undisclosed/unexplained assets was given to the taxpayers under the scheme to avoid valuation related complications.
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