The Federal Board of Revenue (FBR) has collected over and above Rs 800 million as tax deposited by the potential owners of undisclosed income and assets under the Investment Tax Scheme-2008. Sources told Business Recorder on Monday that the board would not give extension in the deadline of December 31 for availing the scheme.
People who have not yet availed the scheme, should legalise their assets on payment of nominal amount of 2 percent tax. People having undisclosed assets and income still have time to declare undisclosed and unexplained assets and income under the scheme.
They can avail the scheme till 5 pm in the evening on December 31. However, there is no possibility of extending the deadline for the scheme. Sources said that the FBR has ample database to take possible action against the potential owners of undisclosed income and assets, who would not avail the benefits of the scheme.
So far, the board had received a huge amount of more than Rs 800 million as tax on legalisation of hidden assets and income. This is a first of its kind of scheme where discretion to work out fair market value of the undisclosed/unexplained assets has been given to the taxpayers under the Investment Tax Scheme-2008 to avoid valuation-related complications.
The discretion to adopt fair market value of the assets has been left to the taxpayer. About the filing of corporate returns, sources said that it is easy to electronically file income tax returns. Companies are feeling comfortable in filing of electronic returns. It is hoped that the corporate sector would timely file their returns within the given time frame.
When contacted, tax experts said that the FBR has followed the Egyptian Tax Model 2003-2004 for implementation of the Investment Tax Scheme-2008 in Pakistan. In case of Egypt, Egyptian Tax Department had slashed corporate income tax from 40-20 percent for expanding the tax net and improving tax-to-GDP ratio. At the same time, all tax exemptions were withdrawn except 2-3 along with reduction in corporate income tax in Egypt.
As far as legalisation of hidden income and assets were concerned, Egyptian Tax Department had launched a unique scheme where no tax was collected on legalisation of undisclosed assets and income. The rate of tax under the amnesty scheme was zero on legalisation on hidden assets and income.
The Egyptian Tax Department did not asked any question about the source of income from persons, who availed the scheme. It was made mandatory for the new taxpayers to file income tax returns for three years in Egypt. The same time period was followed in Pakistan under the Investment Tax Scheme-2008.
There was a tremendous response to the amnesty scheme in Egypt as the scheme was launched by the Egyptian Tax Department after wide publicity and 100 percent political support of the then government.
Resultantly, taxpayer population was doubled during 2-3 years and revenue registered significant growth since implementation of the tax policy since 2003-2004. There was also strict enforcement of tax laws with implementation of IT strategy to broaden the tax-base in Egypt, experts added.