The amnesty scheme seems to be the first ever scheme out of dozen or so offered in the country which is making headwinds. This appears to be the only silver lining in an otherwise full of pessimism economy. Tomorrow is the last date to declare the assets in the scheme announced in April. The actual time that the people got to avail the scheme is two weeks; after the fear of the courts striking it down was over. This is too little a time to comply with such a scheme. One can argue that those who want to avail had enough time to do homework before the court’s soft nod came; and two weeks are ample to avail.
Yes, it’s true as long as domestic assets are concerned; but that might not be the case for foreign declarations as even today, there are ambiguities such as to use accounts of declared person or of immediate family members. Plus, the time available to transfer funds is cut short by two days as today (Friday) Middle East (mainly Dubai) is closed where as on last day (30th June, Saturday) New York is off.
Hence, those intend to file in last two days need some grace time for funds to flow in Pakistan. The scheme should get at least two weeks extension for those who wish to declare foreign assets and remit the taxed money back into the country.
Having said that, according to unconfirmed sources, the response is better than what the FBR was anticipating. The cautious estimates are that the tax collection could be around Rs100 billion (0.3% of GDP) with declaration around Rs2.5 trillion ($20 bn). Foreign repatriation is likely to be around $2 billion. The actual number is hard to get; but every tax consultant is working day and night. Indonesia came up with a similar scheme in 2016 which fetched $8.5 billion in tax revenues with around $360 billion of assets declared. The foreign assets repatriation was $11 billion. Given, the size of Indonesian economy is three times that of Pakistan’s; the collection target at home should be one third of what Indonesian fetched.
The potential could be around $3-4 billion repatriated with around Rs250-300 billion in tax collection. Optimists think that foreign repatriation can reach the level, if the scheme is extended for a couple of weeks.
The Indonesian scheme was for nine months while this one is for 2.5 months with effective time of two weeks. It is hard to extract maximum juice from it, especially in case of foreign repatriation. Even within these two weeks, there were confusions on foreign income declaration and on how to repatriate money if the beneficiary does not have a foreign currency account.
Thus, there is rationale for extension of the scheme to avail full benefit from the scheme. The case become more compelling seeing the precarious foreign exchange condition of the country. But the question is there a legal way to do it; as presidential ordinance is required in the absence of parliament endorsement.
Without getting into the legal hitches, the case is strong to extend for repatriating money for those who would have already declared by 30th June. This means, all PSID generates through FBR system till June 30 may be allowed to be paid in exchequer subsequently.
Online Declaration (Forms) should be allowed to be filed till June 30 without payment (currently mandatory for submission of declaration) for above cases provided if payment is not made within 15 days (in reference to PSID created till June 30). However, such declarations may not be considered proper under amnesty scheme. Thus, it needs some amendment.
According to unconfirmed sources, the foreign declaration is over $1 billion from around 450-500 foreign declaration with around 9000 PSID are stuck in New York for transfer. The potential is huge and it has to be tapped for once and all.
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