ISLAMABAD: As the much-hyped Tax Amnesty Scheme announced by the previous government has failed to attract repatriation of the expected billions of dollars during the past one month, experts believe that the duration of the scheme is needed to be extended in order to get maximum benefit from the voluntary asset declaration programme.
Amidst uncertainty especially after the scheme being challenged in Supreme Court of Pakistan (SCP), no considerable amount has been repatriated under the scheme except around Rs10 billion declared through tax amnesty domestically so far.
According to sources, most of the people, who are interested to benefit from the scheme, are waiting for clarity of situation particularly the decision of the Supreme Court in the amnesty case. In case the court decides in favour of the scheme, the Federal Board of Revenue (FBR) could easily collect $2 to $3 billion from the programme even within the stipulated time. Otherwise, the duration of this scheme needs to be extended for another two to three months.
The Ministry of Finance, which is facing difficulties in reducing more pressure on dwindling foreign exchange reserves, is also keenly awaiting the court’s decision which will have a great influence on the fortune of the tax amnesty scheme passed by the parliament alongside the 2018-19 budget recently.
As per officials, FBR is expecting around $2.5 billion to be raised from the amnesty scheme which includes both the amount of tax to be collected and the amount expected to be repatriated under the scheme. However, very little is expected to flow within the financial year 2018 ending on June 30 due to uncertainties including the involvement of the SCP. According to experts the current window of amnesty scheme most probably would need to be extended, because until everyone is clear about the direction of the apex court, very few people are likely to submit any declarations.
“The amnesty scheme should be extended till September 2018, the tax filing period to get maximum benefit from the scheme. Countries like Argentina, Brazil, Indonesia, which had introduced such schemes on the same time, had also given eight to nine months,” said Sustainable Development Policy Institute (SDPI) Dr Viqar Ahmed while talking to Pakistan Today, adding that the previous government wanted to force non-tax payers to become filers before the end of FY2017-18 and by making the scheme more of a carrot on a stick.
“Even the caretaker government can extend the period from June 30 to next few months as the scheme is now part of the finance bill. In financial matters the interim government enjoys powers to take major decisions,” he added.
Moreover, people willing to shift money from abroad also need enough time to fulfil required process of financial transaction and closure of business, experts opine adding the partial repatriation of foreign assets of resident Pakistanis back home takes time.
Former prime minister Shahid Khaqan Abbasi unveiled the tax amnesty scheme in the first week of April and later on President Mamnoon Hussain issued the Foreign Assets (Declaration and Repatriation) Ordinance to give it legal effect.
Under the scheme, resident Pakistanis can declare their foreign assets at a flat rate of three per cent and foreign liquid assets at five per cent to skip legal action for holding assets so far undeclared.
A two per cent concessional rate is applicable on liquid foreign assets already repatriated back home but not declared in tax returns. And, a similar rate will apply to liquid assets repatriated and invested in government securities for up to five years or in the proposed dollar bonds.
