ISLAMABAD: The government has initiated recovery proceedings against over 200 super-rich people of Karachi, who were reluctant to pay the Capital Value Tax (CVT) to the tune of Rs3 billion on their foreign assets held abroad. Sources told Business Recorder Friday that out of Rs3 billion recoverable, Rs1.3 billion has already been recovered from these super-rich individuals.
The attachment of the bank accounts of these people has been started in the first phase.
The Federal Board of Revenue (FBR) has adopted coercive measures against these super-rich individuals who failed to pay CVT on foreign assets. The FBR has issued orders against 200 rich people after their failure to respond to repeated notices.
The policy is to take action against the elite class who are not ready to pay the due amount of taxes. The relevant Automatic Exchange of Information (AEOI) Zone of the Large Tax Office (LTO) Karachi has taken this bold step against the super-rich defaulters of the CVT after the fulfillment of all legal formalities and procedures.
So far, 40 bank accounts have been attached and an amount of Rs1.3 billion has been recovered from these persons including businessmen and bankers.
The tax department has attached 15 bank accounts of the super-rich people in Karachi in a single day (Friday). This month, 25 bank accounts have so far been attached. The recovery process of attachment of bank accounts would continue in coming days.
The remaining bank accounts will also be attached after the completion of legal formalities. These persons are not responding to the notices of the FBR and the Commissioner Appeals has confirmed the orders of the tax department.
There was a perception among these persons that recovery notices would not result in actual attachment and recovery of the amount from their bank accounts, officials said.
After the attachment of bank accounts, the next measures would be the attachment of their immovable properties and the possibility of arrest, sources said.
According to the sources, the CVT on foreign assets was due by December 15, 2022. Around 6,000 rich people are required to pay the CVT on foreign assets and nearly 4,000 were required to pay the super tax on high-income earners.
Presently, there is no bar on the government to collect CVT on foreign assets and tax on deemed income basis in Sindh, the sources said. The taxpayers/resident individuals who failed to deposit Capital Value Tax (CVT) on their foreign assets by December 15, 2022, are liable to pay the default surcharge at the rate of 12 percent per annum.
The one percent CVT is applicable on the value of foreign assets of a resident individual where the value of such assets on the last day of the tax year in the aggregate exceeds Rs100 million.
The last date for filing of electronic declaration and payment of the CVT on foreign assets was December 15, 2022.
Under the Capital Value Tax Rules, 2022, the value of foreign assets shall be converted into rupees for the calculation of CVT on foreign assets of resident individuals.
Copyright Business Recorder, 2023
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