The ‘Foreign Assets Declaration Scheme’ (FADS) — a draft of amnesty scheme — has been handed over to Prime Minister Shahid Khaqan Abbasi by the Federal Board of Revenue (FBR).
An Indonesian model has been adapted for the draft. Under this model, 3 to 5% tax rates are proposed to bring back offshore assets to Pakistan.
Another comprehensive plan has been contrived by the tax authorities to clear all pending tax refunds worth billions of rupees before the end of PML(N) tenure.
The official sources said:
If this proposed scheme ensures confidentiality of those availing this scheme and also grants protections from NAB and Anti-Money Laundering (AML) laws, Pakistan can get $2 to $4 billion on immediate basis.
Following the same scheme, Indonesia had attracted $30-$40 billion back into its economy by offering lower rates under its amnesty scheme.
Many countries had introduced amnesty schemes after the Panama Leaks affair, to regularize foreign assets of their nationals.
The government, however, has rejected this opportunity for local asset holders, so only owners of offshore companies and assets will be able to take advantage of this amnesty.
PM will be taking up FADS on Monday or after his return from Davos after attending the World Economic Forum.
Masood Naqvi, Chairman of Tax Reforms Commission, told a local news media that 11 countries, including India, had offered amnesty scheme to bring back foreign assets into their countries.
He said that India, however, had proposed higher tax rate in the range of 35%, therefore, could bring back only $10 billion.
If confidentiality of beneficiaries of this scheme is ensured and grants protections from some laws, Pakistan could bring back $5 to $10 billion.
Dr. Ishrat Hussain, former governor State Bank of Pakistan, said:
Pakistan should introduce one-time amnesty just on the pattern of Indonesia as they were able to bring back $30-$40 billion.
It is very strange how the government only notices foreign examples when they can receive any political gain. Other examples of first world countries which took strict measures against tax evaders are completely ignored.