Prime Minister Imran Khan has, in principle, approved the first tax amnesty scheme by the current government. It is expected to come into effect by April 15, 2019.
The approval came after the Finance Minister Asad Umar presented it in a meeting and briefed the premier about different prospects of the scheme.
However, the amnesty scheme is yet to be approved by the federal cabinet, which is expected later today. After the final approval, the amnesty scheme shall be implemented from mid-April through a presidential ordinance.
The draft documents reveal that the amnesty scheme will last till June 30th, 2019 – 45 days from its introduction.
Asad Umar was very clear about the scheme and said this will be the last chance for tax-evaders to disclose their Benami assets and properties and avoid being prosecuted. He announced to launch a full-fledged crackdown against the defaulters after the scheme.
Asad Umar’s Final Warning
Finance Minister, Asad Umar said that the upcoming tax amnesty scheme is the last chance for tax-evaders to declare their properties and assets and avoid any legal action which would be initiated against defaulters after the scheme is closed.
The minister made these remarks during the launch of a medium-term framework “A Roadmap for Stability, Growth and Productive Employment” at BISP headquarters on Monday.
He said that the government had acquired all the data, but wanted to give tax defaulters a chance before starting a crackdown against them.
He said people need to realize that this is their only chance to enter the tax net, “once the scheme is closed, they [tax-evaders] will not find any hiding spot.”
What Went Wrong in PMLN’s Amnesty Scheme?
The document further reveals that the last scheme couldn’t add many non-filers as it was mostly availed by filers. The scheme attracted only 25% declarations in immovable properties abroad, mainly in the UAE, UK, and Canada, and most people preferred to keep money outside Pakistan.
The document says that the Foreign Amnesty Scheme was mostly used for money whitening as it neither led to higher tax returns overall nor for the year 2018.
The scheme was meant to attract a higher number of declarations, but undisclosed properties and bank accounts remain undisclosed at large.
While an official announcement is still pending, which might come following a go-ahead from the Federal Cabinet, here’s a sneak peek.
- The scheme will be called ‘Assets Declaration Scheme.’
- It will include the Benami Act – which propels declaration of all Benami assets, FED, and sales tax – something which PMLN’s last amnesty scheme lacked.
- Will enforce people to put cash in bank accounts
- Includes bank credits of the last five years
- Requires tax return filing
- Higher valuation & rates
- Asks for foreign assets to be liquidated and the money to be remitted to Pakistan via banking channels
Valuation of Assets
- As per the proposal, the Valuation of Assets on open plots, land, and flats will be equal to the cost of acquisition or FBR values on April 15, whichever is higher.
- For Benami superstructures, the valuation will rise to Rs. 1500 per square foot. Whereas, for motor vehicles, it will be the cost incurred until original registration.
- Similarly, the tax charged on undisclosed gold will be as much as Rs. 5000 per gram.
- The scheme has proposed a tax of 10% on Benami Assets and shall be reduced to 5% if the assets are liquidated and repatriated into Pakistan.
Own Bank Accounts and Credit Entries
- The document proposes a tax of 1% of the total credit entries from July 2013 to June 2018 – or – 10% of peak credit entries during this period, whichever is higher.
Credit Entries in Benami Account
- For Benami accounts, the proposed tax on total credit entries from January 2017 to April 15, 2019, is 2% – or – 10% of peak credit entries during this period, whichever is higher.
Any Other Assets
- It shall be 7.5% of the prescribed value.
So, Who Qualifies to Avail This Opportunity?
As per the document, all companies and individuals qualify for this scheme except:
- Public officer holder since January 2000, their spouses, children, siblings or lineal ascendant or descendants
- Proceed derived from the commission of a criminal offense.
- Those having cases pending before a court of law with the exception of older pending litigation