Revised Tax Amnesty Scheme to bump up Pakistan’s game

April 30, 2019 (MLN): The Assets Declaration Ordinance, 2019, which is being referred to as the revised Tax Amnesty Scheme, is plausibly in the process of promulgation by the Government. The draft scheme serves the purpose of economic revival and growth by encouraging a tax compliant economy, and shall be extended to the whole of Pakistan and come into force at once.

The provisions of this Ordinance shall apply to any undisclosed asset, undisclosed sales, undisclosed income of every person other than public company as defined in the Income Tax Ordinance, 2001.

However, the Ordinance shall not apply to holders of public office and their immediate relatives, any proceeds or assets that are derived from the commission of a criminal offence, and assets, incomes and sales in cases pending before a court of law.

Subject to the provisions of this Ordinance, any person may make a declaration of the undeclared assets, undeclared income and undeclared sales to the Federal Government by the due date. The declaration shall be made electronically on the web portal as specified by the Federal Government.

The undisclosed assets within the due date shall be chargeable to tax at the rates specified in the Table below:

Class of assets / income

Declaration is filed on or before

Valuation

 

June 30, 2019

September 30, 2019

December 31, 2019

 

Undeclared assets (other than domestic real estate) / undisclosed income

 

5%

10%

20%

Fair market value or cost whichever is higher, as declared by the declarant

Domestic Real Estate

1%

2%

4%

Fair market value (not less than value prescribed by the FBR under section 68 of Income Tax Ordinance, 2001), as declared by the declarant

In case of declaration of foreign assets, the value of these assets shall be converted into Pak Rupees by applying the Exchange Rate prevalent on the date of declaration. Any foreign asset declared under this Ordinance shall be required to be repatriated to Pakistan or invested in Pakistan Banao Certificate before filing of declaration in the manner prescribed by the State Bank of Pakistan. This condition shall not be applicable on such foreign asset which represents foreign real estate.

If a return has not been filed, the declarant shall file his income tax return for tax year 2018 and pay tax on income other than that utilized in acquisition of undisclosed assets, income or sales offered for tax at the specified rates, and wealth statement as at June 30, 2018.

If return for tax year 2018 has been filed, the declarant shall revise his income tax return filed for tax year 2018 and pay tax on income other than that utilized in acquisition of undisclosed assets, income or sales offered for tax at the specified rates, and wealth statement as at June 30, 2018.

If the declarant is a registered person or liable to be registered under the provisions of the Sales Tax Act, 1990 or the Federal Excise Act, 2005, he shall declare his undisclosed sales for the tax periods from the 1st July, 2013 till the 30th June, 2018 (both days inclusive) and pay tax at the specified rate. Moreover, he shall also declare his excessive or unlawful input tax claimed for the tax periods from the 1st July, 2013 till the 30th June, 2018 (both days inclusive) and pay tax at the specified rates.

A plausible game changer!

A prominent economist, Mr. Muzzamil Aslam has termed the revised amnesty scheme as a real game changer for the country, as for the first time the government is offering domestic real estate amnesty on very lucrative rates. 

According to him, with this amnesty scheme, the real estate activity will be resumed and the institutional money will start to flow into real estate due to resolution of black/white ratio elimination. Moreover, Banks’ willingness to provide mortgage financing will also be prompted.

In the end, the government will be the ultimate beneficiary of this amnesty on account of more documentation and mobilization of savings into productive sector. This will ultimately resolve the productivity gap issue. Hence lower deficits.

Copyright Mettis Link News

Posted on: 2019-04-30T11:33:00+05:00

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