State Bank of Pakistan (SBP) rolled out instructions for beneficiaries of tax amnesty scheme saying that the tax payment can only be made through banking channels either from the declarants’ own accounts or from the accounts of the declarants’ immediate family members i.e. his/her parents, children, spouse and siblings (brothers and sisters).
The central bank warned that tax payment for the amnesty scheme cannot be made through Exchange Companies or Money Business Services.
The balance in foreign currency deposits as of 31st March 2018 or 20th June 2018, whichever is less can be used for the purpose of tax payment. For instance if the balance in an foreign currency account is USD 10,000 and USD 5000 respectively on 31st March 2018 and 20th June 2018, the tax payment to the extent of USD 5000 can be made from this account.
The declarants of undisclosed assets having bank accounts outside Pakistan but presently residing in Pakistan can also pay the tax in USD by depositing cheques with the authorized branches of National Bank of Pakistan. The proceeds will be collected in the SBP account at New York. The collection of proceeds may take as many as 7 to 10 days.
It is worth mentioning here that former Prime Minister Shahid Khaqan Abbasi announced a special tax amnesty scheme for Pakistanis who are non-payers, in April 2018, aimed at bringing more people into the tax net.
Accordingly, those having their assets abroad can benefit from this scheme after paying a 2 percent penalty, however political persons and their families could not benefit from this scheme.
A Computerized Payment Receipt (CPR) is issued to declarants within 24 hours once the amount is remitted to SBP.
As per the Foreign Assets Declaration Act 2018, the declarants are required to report the balances in their accounts abroad. If the declarant repatriates the whole balance in the account to Pakistan and also pay the applicable tax from that balance, he/she should repatriate the whole amount to Pakistan including the taxes paid, which would be considered under the amnesty scheme.
The tax liability is in USD, and the exchange rate variation will have no impact on the tax liability of the declarant. The CPR is issued for the same PKR and USD amounts as mentioned in the PSID. Thus the exchange rate for the purpose of tax payment is locked for the tax payer at time of generation of PSID. The liquid funds to be repatriated for conversion into PKR will however be converted and deposited in the declarants’ PKR account at the rate prevailing on the date of realization of USD funds in the SBP account, the SBP clarified further.
These instructions have been released to address the emerging issues of non-taxpayers for declaring foreign assets however the central bank rolled out the procedure in detail earlier, which can be viewed here.
The amnesty scheme will be valid till June 30 2018. It is a one-time incentive for non-taxpayers to declare hidden assets inside and outside Pakistan.
Chairman FBR Urges Businessmen to Avail Tax Amnesty Scheme
Chairman of the Federal Board of Revenue Tariq Mahmood Pasha on Thursday said tax amnesty scheme is for the business community who should take full advantage of it as keeping undeclared assets in Pakistan and abroad is becoming increasingly difficult.
The business community has not committed any crime by sending money abroad or buying assets as law and order situation, shortcomings in the system, and weaknesses of FBR are behind it, he said.
Addressing the business community at FPCCI, he said that money finds its way to the place where it secure. President FPCCI Ghazanfar Bilour, Chairman UBG Iftikhar Ali Malik and others were also present on the occasion.
The response of the scheme is very encouraging but the figures cannot be revealed at this stage adding that the country will have access to the accounts of Pakistanis in 102 countries in three months which will make it difficult and very costly for the people to keep undeclared assets.
Chairman FBR said that the scheme will improve revenue, stabilise foreign exchange reserves, reduce the deficit, improve the balance of payments, and encourage foreign direct investment.
He said that another such scheme is not possible anytime soon while extension in the date is very difficult.
The Chairman FBR said that Dubai has started informing Pakistani authorities about the investment of Pakistani there while the mapping of real estate in Pakistan will be completed shortly.
He said that we have planned to reduce withholding tax on filers and increase it on non-filers as soon as the revenue situation warrants it.
At the occasion, Ghazanfar Bilour said that many members of the business community could not benefit from the scheme due to the holy month of Ramadan, Eid, confusion and elections, therefore, its last date should be extended.
CDC to facilitate Transfer of Book Entry Securities
Central Depository Company of Pakistan Limited will facilitate Transfer of Book Entry Securities in the Central Depository System against declaration of assets under Government of Pakistan’s Tax Amnesty Scheme by way of the Voluntary Declaration of Domestic Assets Act, 2018 and the Foreign Assets (Declaration and Repatriation) Act, 2018. In this regard, CDC, with the prior approval of Securities and Exchange Commission of Pakistan has issued necessary circular detailing the requirements and procedures of such securities’ transfers.