The government is seriously working on a 'voluntary declaration scheme' for individuals to legalise their undeclared assets, stocks and properties including assets/properties held aboard. Sources told Business Recorder here on Thursday that the Ministry of Finance and Federal Board of Revenue (FBR) are examining different options in this regard. The objective of the scheme is to encourage individuals to bring back their assets/properties held outside the country. The tax rate of the scheme has yet not been proposed.
Sources further said that the scheme was discussed in the last meeting of the tax reforms implementation committee (TRIC) held on March 2 and a detailed presentation was made by a member of TRIC from private sector. The task of preparing the draft of the scheme was assigned to TRIC private members. After this presentation, according to the reliable information, TRIC private members have been assigned the task of preparing draft scheme to be presented to Finance Minister Ishaq Dar.
According to rough estimates, assets held by Pakistanis aboard may be within the range of US$80-85 billion to US$120 billion. The scheme would be designed in a way to attract Pakistanis to declare their foreign assets and properties in Pakistan. Some of the key features of the proposed scheme may include confidentiality of the data and taxpayers, who would opt for 'voluntary declaration schemes'. It has also been proposed that the scheme should not be allowed to the public office holders.
The scheme may make it compulsory for the persons, availing scheme, to file their income tax returns for a consecutive period of five years. There might be some mechanism to immediately register and document the persons availing the scheme through issuance of National Tax Number (NTN) to them.
In line with the past amnesty schemes, the government may introduce the scheme for a period up to six months. When contacted, an expert said that Pakistan can benefit by introducing a scheme for persons having offshore assets on the pattern of successful experience of India and Indonesia to bring concocter money into the documented economy. An 'Income Declaration Scheme' was launched in India on June 01, 2016. Under the scheme, those who had evaded taxes were given the opportunity to avoid punishment by paying tax, penalty and cess totalling 45 per cent of the undisclosed income. Up to October 1, 2016, declarants (64,275) declared approximately $97.5 billion. The scheme is expected to get approximately $44.8 billion as tax revenue from the scheme. Indonesia also introduced a tax amnesty scheme recently. The amnesty helped collect $7.45 billion during the first phase of the scheme which expired on September 30, 2016. Around 366,757 taxpayers signed up for the first phase of the scheme declaring approximately $277 billion. Pakistan can also benefit by introducing a scheme on similar lines to bring concocter money into the documented economy, the expert said.