The government may promulgate a presidential ordinance or present a bill in the Parliament to provide an option to the persons who had submitted tax payment slips i.e. PSIDs till July 31, 2018 but were unable to submit their declarations for legalisation of assets under the last amnesty scheme.
However, Federal Board of Revenue (FBR) is totally unaware of any proposed extension in the filing of declarations under the Voluntary Declaration of Domestic Assets Ordinance, 2018 and the Foreign Assets (Declaration and Repatriation) Ordinance, 2018.
Moreover, the FBR also has no clue to any proposed ordinance or bill to amend the Voluntary Declaration of Domestic Assets Ordinance, 2018 or Foreign Assets (Declaration and Repatriation) Ordinance, 2018 for extension in date for filing of the scheme.
When asked about 3,500 persons who had generated PSIDs but failed to submit declarations under the expired amnesty scheme, sources said that the FBR is not aware of any such number. However, a specific date was given for the scheme and tax payments and declarations have to be submitted within the due date of the amnesty scheme expired on July 31, 2018.
If the government is considering any extension in the Amnesty Scheme, this requires an ordinance or a bill.
Minister of State for Revenue Hammad Azhar informed Business Recorder at FBR House that the proposed scheme would only be available to those persons who had filed their tax challans up to July 31, 2018. The persons who submitted challans on last date of the scheme would also be able to avail the facility. These persons would be provided a one-time opportunity to file their declarations under the amnesty scheme, he added.
The government had announced two tax amnesty schemes namely, Foreign Assets (Declaration and Repatriation) Ordinance, 2018 for undisclosed foreign assets and Voluntary Declaration of Domestic Assets Ordinance, 2018 for undisclosed income and domestic assets. However as required by the Constitution, both ordinances were placed before the Parliament and through the Finance Act 2018, these became the Voluntary Declaration of Domestic Assets Act, 2018 for undisclosed income and domestic assets and the Foreign Assets (Declaration and Repatriation) Act, 2018 for undisclosed foreign assets. These Acts were further amended through presidential ordinances on June 30, 2018.
The original closing date for filing declarations under the amnesty scheme was June 30, 2018. It was extended till July 31, 2018 on account of representations from trade bodies, professional associations and general public due to short operational period after clearing legal and procedural challenges and problems faced by declarants in the payment of tax on foreign assets and repatriation of liquid assets. The presidential ordinances dated June 30, 2018 amended the amnesty acts to extend the applicability date of the schemes and include explanations on ambiguities such as exchange rate. The amendment ordinances have also provided for revision of declarations.
About 55,225 declarations were filed in which declared value of foreign assets was around Rs 577 billion and that of domestic assets was around Rs 1,192 billion. Declarants paid around Rs 97 billion out of which around Rs 36 billion was collected on foreign assets and Rs 61 billion on domestic assets. In addition, $ 40 million has been repatriated. This response to the amnesty schemes was unprecedented.
Amnesty scheme for foreign assets applied to both liquid and immovable assets such as bank accounts, shares and mortgaged properties. Tax rates ranged from 2% to 5%, depending on the type of asset. Special tax rate of 2% was applicable to liquid assets which were repatriated into Pakistan. The amnesty scheme for domestic assets covered all types of assets and income, with tax rates of 2% and 5%. To protect declarants from any harassment, both schemes under Voluntary Declaration of Domestic Assets Act, 2018 and Foreign Assets (Declaration and Repatriation) Act, 2018 promulgated on 8th April 2018 were eventually made part of the Finance Act 2018 to ensure complete confidentiality of declarants' information. Moreover, such information cannot be used as evidence against declarants under any other law.
The low rates of the Amnesty Schemes ranging from 2% to 5% were major incentive for declaring undeclared assets and income. Pakistan being a signatory to the OECD Multilateral Convention has got access to information about offshore financial accounts of Pakistani residents from September 2018. This will enhance the capacity of FBR due to access to offshore financial accounts of Pakistani residents held in the signatory countries. Necessary amendments have also been made in the Protection of Economic Reform (PERA) Act, 1992, to regulate FX movements and bring it in line with Income Tax Ordinance, 2001. Moreover, amendments have been made in the Income Tax Ordinance, 2001, whereby FBR may inquire about the source of foreign remittance above Rs 10 million and limitation of five years to probe foreign assets and income has been removed.
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