PBC asks PM to offer tax amnesty scheme to help bolster declining forex reserves

Islamabad: Pakistan Business Council (PBC) has requested the government to offer tax amnesty scheme for resident and non-resident Pakistani’s which could be availed to bring back $20b worth of money held abroad to support the sliding foreign exchange reserves.

In a meeting held last week by PBC with Prime Minister Shahid Khaqan Abbasi, this suggestion had been put forth according to sources.

According to AFC Ferguson, one of the country’s leading chartered accountancy firm, had declared that roughly $150b worth of assets were said to be held by resident and non-resident Pakistani’s abroad.

PM Abbasi didn’t warm up to this idea, as he voiced concerns over the political impact of the tax amnesty scheme and what rate it would be taxed at for those opting-in for it. If legalized, it would allow individuals to declare and legalize their hidden assets.

An anonymous PBC member commented that the govt had no other options left to in regard to increasing foreign exchange reserves and offering an amnesty scheme could allow to bolster reserves quickly.

Dr Miftah Ismail, Special Assistant to the PM on Economic Affairs confirmed that PBC had made no formal proposal but discussed the possibility of offering a scheme to get back foreign assets held by Pakistani’s.

During the tenue of ex-PM Nawaz Sharif, a tax amnesty proposal had been floated for which a committee had been constituted consisting of all stakeholders to chart out a scheme in this regard.

Stakeholders which included businesses and government officials had almost reached an agreement for enacting Foreign Asset Tax Bill 2017, for offering amnesty to Pakistani’s who held assets abroad.

Out of this $150b, $40b had been invested in foreign real estate either directly or through offshore companies. $50b is held in guise of shares in Pakistani companies, $50b in other assets which includes manufacturing concerns and $40b are parked in bank accounts.

AFC Ferguson’s analysis revealed that roughly $3b to $4.5b may get repatriated to Pakistan at the max in comparison to the quoted figure of $20b provided by PBC.

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