Govt fails to bring back undeclared money under foreign assets scheme

The government high-ups were expecting to bring back four to five billion dollars through this scheme. 

ISLAMABAD: The outgoing government has failed to convince expatriates to bring back undeclared money to Pakistan under the voluntary declaration and repatriation of foreign assets scheme.

Sources close to the development told that no Pakistani living abroad has so far contacted to tax authorities to take benefit from this scheme. On the other hand, few individuals belong to Karachi and Lahore by paying the tax have whitened their black money under the Voluntary Declaration of Domestic Assets.

The amount is in millions, as sources told that people are just getting information about the scheme but not attaining the benefit.

The government high-ups were expecting to bring back four to five billion dollars through this scheme.

The Prime Minister had earlier announced an approximately three months foreign as well as domestic tax amnesty in the first week of April 2018.

The government had announced to apply 5 per cent tax on liquid assets not repatriated, 3 per cent tax on immovable assets outside Pakistan and 2 per cent levy respectively on liquid assets repatriated and invested in government securities up to 5 years in US dollar-denominated bonds with six month profit payments in equivalent rupees (rate of return 3 per cent) and payable on maturity in equivalent rupee as well as liquid assets repatriated.

Furthermore, under the declaration of Domestic Assets, two per cent tax is applicable for the foreign currency held in a foreign currency account in Pakistan as on the 31 March, 2018 and encased in equivalent rupee as well as foreign currency held in a foreign currency account in Pakistan as on the 31 March, 2018 which is invested in government securities up to 5 years in US dollar dominated bonds with six monthly profit payment in equivalent rupees (rate of return 3 per cent) and payable on maturity in equivalent rupee and 5 per cent for other assets.

Sources told that the tax officials had already opposed this scheme but they were bound to company the instructions of government now the caretaker government is on its way, the officers told that they can make a final decision for extending the period of the tax amnesty scheme.

It is pertinent to mention here that the two elected governments of PPP and PML-N announced five amnesty schemes. An asset declaration scheme, at 2 per cent tax rate, announced by PPP government only attracted Rs2.5 billion worth of assets.

A side-scheme for releasing customs duty evaded vehicles was also offered, which attracted more than 50,000 vehicles.

The PML-N government had already offered three schemes in this tenure. First one was in December 2013 when an amnesty was given to those investing in selected industries after asking their sources of investment – but not from any criminal liability – made until 2015.

Small-traders were offered a registration scheme in 2015 where their initial capital was exempted from disclosure of sources. The scheme was an utter failure despite claims of traders that at least a million traders would be registered.

The third one was to improve valuations in the real-estate sector and a scheme was offered that would have valued properties on the Federal Board of Revenue’s (FBR’s) determined values and would have attracted rates at 10 per cent, 7.5 per cent and 5 per cent for holding period of up to one year, two years and three years respectively, and none for longer period. This has also not succeeded in eliciting significant declarations.

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Shahzad Paracha
The writer is a member of Pakistan Today's Islamabad bureau. He can be reached at [email protected]
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