ISLAMABAD (APP):Finance Minister Dr Shamshad Akhtar has directed the Federal Board of Revenue (FBR) and State Bank of Pakistan (SBP) for improving payment procedures and ensuring effective facilitation to tax payers under amnesty scheme.
According to a press release issued by the Ministry of Finance here Wednesday, the minister was closely monitoring the operation of the amnesty schemes and constantly advising both the FBR and SBP for improving payment procedures and ensuring effective facilitation.
As per directions of the Finance Minister, FBR has set-up helplines, which operate 24/7 with dedicated telephone lines and e-mails for quick response to queries and for frequently asked questions, online user guide and all relevant documents have been published on FBR’s website.
The website were periodically updated on the basis of queries raised by intermediaries and declarants. Frequent interaction with private sector including accounting professionals and tax practitioner bodies have been helpful. Similar arrangements have been put in place in SBP.
The online user guide provides step by step information regarding registration under the amnesty schemes, procedure for payment of tax and submission of declarations.
Officers well versed with the features of the amnesty schemes have been assigned the task of responding to queries. There is also a fully functional IT support team which regularly monitors online IT system.
It said that for payment of tax on foreign assets, State Bank of Pakistan has devised a procedure, whereby tax in US Dollar is deposited into SBP’s account through wire transfer. Government has issued Government of Pakistan’s US Dollar Denominated Amnesty Rules, 2018, whereby SBP has been authorized to issue these bonds having a maturity period of five years and annual profit of 3 percent to be paid semi-annually.
According to the rules, citizens of Pakistan can invest in these bonds out of remittances declared under the foreign amnesty or through encashment of foreign currency accounts held in Pakistan.
The government announced two tax amnesty schemes, namely, Foreign Assets (Declaration and Repatriation) Ordinance, 2018 for undisclosed foreign assets and Voluntary Declaration of Domestic Assets Ordinance, 2018 for undisclosed income and domestic assets, it added.
However as required by the Constitution, both Ordinances were placed before the Parliament and through Finance Act 2018, these became Voluntary Declaration of Domestic Assets Act, 2018 for undisclosed income and domestic assets and Foreign Assets (Declaration and Repatriation) Act, 2018 for undisclosed foreign assets.
These Acts were further amended through Presidential Ordinances on June 30th, 2018.The original closing date for filing declarations under the amnesty scheme was June 30, 2018.
It has been extended till July 31, 2018 on account of representations from trade bodies, professional associations and general public due to short operational period after clearing legal and procedural challenges and problems faced by declarants in the payment of tax on foreign assets and repatriation of liquid assets.
It said that public response to the schemes has been positive and so far, 55,225 declarations have been filed in which declared value of foreign assets is around Rs. 577 billion and that of domestic assets is around Rs.1,192 billion.
Declarants have paid around Rs. 97 billion out of which around Rs. 36 billion have been collected on foreign assets and Rs 61 billion on domestic assets. In addition, $40 million has been repatriated. This response to the amnesty schemes has been unprecedented.
Amnesty scheme for foreign assets applies to both liquid and immovable assets such as bank accounts, shares and mortgaged properties. Tax rates range from 2 percent to 5 percent depending on the type of asset.
Special tax rate of 2 percent is applicable to liquid assets which are repatriated into Pakistan.
The amnesty scheme for domestic assets covers all types of assets and income, with tax rates of 2 percent and 5 percent.
The low rates of the Amnesty Schemes ranging between 2 percent to 5 percent and is a major incentive for declaring undeclared assets and income. Pakistan has also become a signatory to the OECD Multilateral Convention which will provide access to information about offshore financial accounts of Pakistani residents from September 2018.
This will enhance the capacity of FBR due to access to offshore financial accounts of Pakistani residents held in the signatory countries. Necessary amendments have also been made in the Protection of Economic Reform (PERA) Act, 1992, to regulate FX movements and bring it in line with Income Tax Ordinance, 2001.
Moreover, amendments have been made in the Income Tax Ordinance, 2001, whereby FBR may inquire about the source of foreign remittance above Rs.10 million and limitation of five years to probe foreign assets and income has been removed.
Above all, revenues from the amnesty schemes will help in documentation of the economy as well as bring in onetime payment from non-declarant to officialise their assets. Equally critical is to support Pakistan in its endeavour, to reduce poverty and uplift its population which off-course depends on effective prioritization of development spending.