Amnesty Scheme to fetch decent inflows for Pakistan

Amnesty Scheme to fetch decent inflows for Pakistan

Amnesty Scheme 2018, announced by the previous government on April 5^th, 2018 had been well received after an approval from the Supreme Court on June 12^th 2018. Discussions have taken place over and over again to decide whether or not to extend the deadline for the scheme, which is currently set for June 30^th 2018. 

The idea to introduce amnesty scheme played along the lines of using moral suasion to encourage people to declare their assets at home and abroad, in order to get them legally documented and to collect amnesty against it.

In a country where approximately 50% of businesses are not documented, an increase in documentation would allow higher savings, more investments, increased tax revenues and improved employment conditions.

In addition to expected future inflows due to increased documented assets, the income generated from domestic and foreign amnesties is also expected to help Pakistan support its Balance of Payment by helping with the payment of old debts and reducing the need to arrange new ones. It will further reduce fiscal deficit and domestic borrowings. Pakistan’s current account deficit is at USD 15.96 billion, which is up by 43.3% YoY, while its growing exports are not enough to balance out the imports.

Analysts believe that around USD 30-40 billion will be declared in this Amnesty Scheme, with UAE as the largest source of declaration. . Moreover, about $3-4 billion are expected to be repatriated, meanwhile the government may earn a revenue of around Rs.200 billion.

So far, around 45000 people have benefitted from the scheme and about 22000 to 23000 overseas Pakistanis have gotten in touch with FBR for declaration. As of last night, June 28^th 2018, a total of Rs.47 billion was collected as tax under Amnesty scheme, while several hundred people have prepared challans to declare their assets. It is expected that by this evening, another Rs.107 billion worth of assets will be declared.

Encouragingly enough, an individual has been reported to have deposited tax amounting to RS.550 million. However, the news about a person having declared assets worth $1.2 billion is incorrect.

On June 19^th 2018, Finance Minister Shamshad Akhtar chaired a meeting at Federal Board of Revenue (FBR), where she was updated on the progress of amnesty scheme and gave her final verdict against an extension of the deadline. FBR has no authority to extend it. Last date to deposit tax has been mentioned in the finance bill

She encouraged the senior officials at FBR to use advertising campaigns in order to reach out to the general public during the remainder of the scheme’s validity period so that the scheme could be concluded in a meaningful manner.