ISLAMABAD: The FBR could launch a new amnesty scheme for legalising undisclosed assets and income, but this was only possible after a countrywide enforcement drive against owners of undeclared movable and immovable assets made through 'black money'.
Sources told Business Recorder here on Sunday that the Federal Board of Revenue (FBR) was thinking that the deterrence of confiscation of properties, attachment of bank accounts and arrests could create an environment for thinking about any new whitening scheme.
If the public clearly perceived that their immovable and movable properties made from black money could be confiscated, this would be the right time for launching any 'money whitening' scheme. Otherwise, taxpayers were not even ready to pay nominal sales tax for availing scheme for settlement of their cases regarding illegal input tax adjustments. Tax defaulters were allowed to avail the waiver on default surcharge and penalty in illegal input tax adjustment by depositing 25 percent of the principal amount of sales tax by June 30 this year. The remaining 75 percent of the principal amount should be paid by December 31 of this year in five equal monthly instalments with first instalment payable on August 31. Surprisingly, this amnesty scheme was not successful as the FBR was unable to achieve the assigned target for the amnesty scheme.
This is a classic example that if nominal rates would not attract the people to get rid of cases of fraud, there was no way any new amnesty scheme would achieve the desired results. Thus, such aspects have to be considered before taking any policy decision in this regard, sources said.
During the budget preparation exercise for 2012-13, the FBR tried its best to offer a nominal tax rate for defaulters or claimants of illegal tax adjustments. However, this lower rate of 25 percent did not attract persons who had committed tax frauds. Sources said that persons earning black money had to decide on their own that they should either legalise their assets or they would be arrested or their assets would be confiscated. Thus, the initial working on any amnesty scheme required strict enforcement drive against owners of black money. It is very premature to say that the government would launch any new whitening scheme, sources added.
FBR Chairman Ali Arshad Hakeem, in his first address to officials of Pakistan Customs Service and Inland Revenue Service (IRS), had reportedly stressed the need for an out of the box solution and said that offering a one-time incentive to whiten black money was necessary for documenting the economy, he added. The FBR is legally authorised to announce amnesty scheme under the provisions of the Section 120A of the Income Tax Ordinance of 2001.