Transparency International Pakistan has requested the Supreme Court of Pakistan to ban the recently approved amnesty scheme for real estate sector. A copy of the Transparency International Pakistan letter made available to Business Recorder on Monday also made a plea to the apex court stating: "To consider the new Income Tax (Amendment) Act, 2016, and orders appropriate actions so that this and all such Tax Amnesty Schemes are banned future in Pakistan, as this scheme in incentive to do corruption and then legalises the ill gotten money".
Through the letter, Transparency International Pakistan requested Supreme Court to take action on the 'financial NRO' in the form of perpetual and open ended tax amnesty approved by the National Assembly on 30th November 2016. On November 28, 2016, the Standing Committee on Finance and Revenue of the National Assembly approved yet another amnesty scheme 'facilitating' dirty money in real estate sector, despite protest and walkout by the Opposition. This amnesty is included in Income Tax (Amendment) Act, 2016, approved by the Parliament on November 30, 2016 as Money Bill (Annex-A).
This Money Bill, presented in the National Assembly by Senator Muhammad Ishaq Dar, Minister of Finance, Revenue, Economic Affairs, Statistics and Privatisation, was passed on 30.11.2016. It cleverly avoids use of any word like, "Tax Amnesty", "Investment", "Whitening Scheme", as has been the case in most of the previous Amnesty Schemes, announced by the federal government.
The exact provision providing 3% amount as advance income tax to legitimise the remaining 97% illegitimate income (collections from Bribery, Bhatta collection, tax evasion, black marketing ransom), is called the Income Tax Amendment Act 2016. The letter said the most lamentable and shocking aspect of this provision is blatant discrimination under Article 25 of the Constitution of Islamic Republic of Pakistan, terming it a slap on the face of all honest taxpayers, who have been paying taxes diligently.
It said gross violation of supreme law of the land has been committed bypassing the Income Tax (Amendment) Act, 2016 under provisions of Para 2, Amendment of Ordinance XLIX of 2001, (2), (c); Explanation (2) and Para 4 new section 236W. It said the Income Tax (Amendment) Act, 2016 allows people to keep 97% of their tax evaded money, a move which tax and legal experts say grants a free license for earning black money through bribery, bhatta collection, tax evasion, black marketing and ransom.
The Income Tax (Amendment) Act 2016, 'financial NRO', is not limited to a specific duration, but is timeless and perpetual incentive of Corruption and a licence to earn illegal money through bribery, bhatta collection, tax evasion, black marketing and ransom.
The letter highlighted that the standard maximum income tax on individuals is 35%. Failing to pay the tax within the given time gets a 100% penalty. You are then liable to pay 70% of your income as tax. Because of this new scheme, people will only be required to pay 3% of their income.
Transparency International Pakistan said government's move would put another serious burden on honest taxpayer, who have been paying tax to FBR annually, and he/she will also have to pay 3% as advance tax to FBR. "Is this a penalty imposed on Honest Tax payers by the National Assembly, and is it not a warning to everyone not to be honest?" the letter said Transparency International Pakistan has showed concern that this tax amendment has the potential to destroy Pakistan's tax infrastructure completely. It will encourage the tax evaders and the corrupt as it has put premium for being honest. It said the Income Tax (Amendment) Act 2016 extends yet another amnesty for owners of dirty money by amending section 111 of the Income Tax Ordinance, 2001 giving them facility to pay just 3% of difference of valuation as per FBR's rate and that of local authorities and no question would be asked about the source of money for purchasing property is simply despicable.
Referring to the public statement on November 17, 2016 made by Haroon Akhtar Khan, Special Assistant to the Prime Minister on Revenue stating: "the Government is against any amnesty" and "after passage of the Finance Bill 2016 property would be brought into the tax net and price of property would be evaluated by third party under notification of State Bank of Pakistan and real estate will no longer be a safe haven for black money". The letter said the nation has been deceived and fooled by FBR and Haroon Akhtar Khan. Transparency International Pakistan has sought appropriate actions against such tax amnesty schemes in Pakistan.
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