The Federal Board of Revenue (FBR) has recommended three phases for the new tax amnesty scheme for undeclared assets.
According to a tax amnesty draft prepared by the FBR, the asset declaration scheme would be launched through the promulgation of the presidential ordinance.
The FBR has recommended three phases for the amnesty scheme for the period ending June 30, September 30, and December 31, 2019.
The rate of tax for undeclared assets (other than domestic real estate/undisclosed income) has been recommended at 5pc, 10pc and 20pc for first, second and third phase, respectively.
Besides this, the value of foreign assets to be declared under this ordinance shall be converted into Pak Rupees by applying the exchange rate prevalent on the date of declaration.
The amnesty scheme shall cover the real estate sector at one per cent, two per cent and four per cent for three phases at 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 addition, the undisclosed sales shall be chargeable to tax at the rate of 3pc of such sales in lieu of sales tax and federal excise duty.
The FBR proposed that 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 to a foreign asset that represents foreign real estate.
Moreover, it was proposed that an asset declared under this ordinance shall be prohibited to be transferred to any holder of public office as a gift or below the fair market value by any person.
If an asset declared under this ordinance is transferred in violation of the said condition, such declaration shall be void and shall be deemed to have been never made under this ordinance.
It is pertinent to mention that the newly appointed Adviser to Prime Minister on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Shaikh on Sunday had directed the FBR to review the proposed amnesty scheme and submit a new draft in this regard.
The federal cabinet had already deferred the approval of the tax amnesty scheme as the cabinet members had raised concerns over the possible political implications of going against the PTI’s core values of fighting corrupt practices.
It is worth mentioning that around 82,289 people had availed the PML-N government’s last scheme, resulting in the whitening of assets worth Rs2.5 trillion in return for Rs124 billion in taxes.
Earlier, the FBR had proposed setting different tax rates for the repatriation of offshore assets, disclosure of domestic assets and legalisation of Benami assets.
The FBR had suggested a minimum of 5pc, 10pc and a maximum 15pc rate for the repatriation of offshore assets.
For the declaration of domestic assets, it had proposed 10pc, 15pc, and 20pc rates.