Amnesty Scheme Yields $1.2 Billion in Taxes, $18 Billion in Hidden Assets Whitened

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The FBR has fetched Rs97 billion from declarants, of which Rs36 billion have been retrieved on overseas assets, Rs61 billion on domestic assets, and $40 million has been repatriated.

JUL 31, 2018 (BE2C2): The tax amnesty scheme has encouraged more than 64,000 individuals to avail the opportunity, paying Rs107 billion in taxes on the value of assets they declared under offshore and domestic amnesty schemes.

Roughly, Rs25 billion are expected to be deposited this month, bringing total tax contributions to Rs142 billion, according to FBR officials.

At Rs120 to a Dollar exchange rate, the expected amount may cross $1.183 billion — it may even yield more if the Rupee appreciates further in coming days and weeks.

The tax amnesty scheme ends midnight on Tuesday (today), and there is no possibility of any further extension, a brief statement by the FBR quoted its chairperson Rukhsana Yasmeen as saying.

The last PML-N government had announced the scheme to allow people to declare their hidden domestic and offshore assets amid a drive against tax evasion by the Organization for Economic Cooperation and Development (OECD).

The scheme was also expected to provide a boost to the country’s depleting foreign currency reserves.

On June 30, President Mamnoon Hussain promulgated an ordinance, effectively extending the scheme by a month. The scheme had originally been offered between April 10 while it was set to expire on June 30, but people started availing late because of delays on the part of the authorities.

Earlier this month, the Ministry of Finance declared the response to the amnesty schemes as “unprecedented”.

People have whitened Rs2.1 trillion ($17.5 billion @ Rs120 to US$1) worth of hidden assets.

The assessment by consultancy firm AF Ferguson showed that Pakistanis had $150 billion in hidden foreign assets. It had hoped that about $3 billion to $5 billion could be repatriated to Pakistan.

The tax contributions from the amnesty scheme have helped the FBR to improve its overall low tax collection.

The Federal Government’s recently announced tax reform and amnesty package is expected to overhaul and change the entire taxation system in the country.

The tax package revolves around five major points:

First is that CNIC numbers are to be made NTN numbers to monitor tax compliance of all citizens.

Second is Income tax brackets and percentages to be revised. Filer must complete tax exemption on annual income up to Rs1.2m; maximum percentage of 15pc to be levied on income above Rs4.8m per annum.

Third point is that Undeclared assets held locally or abroad is to be declared after payment of nominal penalties. Those who avail this scheme are to be granted one-time exemption from accountability laws.

Fourth point is tax to be collected on all property transactions to be made uniform (1 percent federal and 1 percent provincial tax). Government will have the right to purchase any property by paying 100pc over and above its declared value within six months of its registration.

And last but not the least, the government has right to monitor citizens financial records and issue notices if they find evidence of tax evasion, then penalties are to be decided.

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