Senate panel gives approval to tax amnesty schemes

Development comes as major boost to PML-N and its plans

ISLAMABAD: In a surprising move, the opposition-dominated Senate panel on Finance approved on Tuesday the offshore and domestic assets’ amnesty schemes, as the country’s top taxman pleaded that an escape route has to be given to beleaguered Pakistani citizens who own assets abroad.

Headed by Senator Farooq H Naek of the PPP, the Senate Standing Committee on Finance approved all the four Bills including two that were implemented thorough the Presidential Ordinance to give effect to the tax amnesty schemes. The schemes are already in place since April 10 to legalise domestic and offshore hidden assets.



The Senate Panel’s stamp gives a major boost to the government that had just a day ago suffered a defeat in the ruling party-dominated National Assembly Standing Committee on Finance on the same issue. However, NA Standing Committee on Finance Chairman Qaiser Ahmad Sheikh explained to The Express Tribune that the government bills were defeated due to absence of treasury members. Sheikh said that he personally was in favour of the schemes.

The president promulgated Foreign Assets Declaration and Repatriation Ordinance 2018, Pakistan Economic Reforms Protection Act Amendment Ordinance 2018, the Voluntary Declaration of Domestic Assets Ordinance 2018 and Income Tax Amendment Ordinance 2018 to implement the schemes.

PTI’s Senator Mohsin Aziz actively participated in the discussions on the amnesty schemes during the meeting and even proposed to increase the tax rates for non-repatriation of offshore assets. However, at the end Senator Aziz said that in principle he would vote against the amnesty bills. The Senators from all other parties including PPP and Independent voted in favour of the scheme. The standing committee also relaxed the requirements of opening offshore assets tax cases through an amendment in the government bill. Against the government’s decision to open offshore tax assets cases as old as 18 years, the committee amended the Income Tax Ordinance 2018 to the extent of allowing only 10-year old cases.

PML-N’s Senator Dr Musaddiq Malik played a role in lowering this condition. He said that opening old tax cases was not compliant with the laws of the foreign jurisdictions.

The Senate panel’s endorsement for the scheme also provides an incentive to those people who were so far cautious due to opposition by the mainstream opposition parties. Deputy Chairman Senate Senator Saleem Mandviwala, who is also a member of the committee, said he would vote in favour of all the four government bills.

To a question, Federal Board of Revenue (FBR) Chairman Tariq Pasha said that so far people have started availing only the domestic assets’ amnesty scheme. The government has offered people to declare hidden domestic assets by paying only 5% tax, which is significantly lower than the prevailing 35% income tax rates that are further subject to 100% penalties.

Pasha said that after the Organization for Economic Development and Cooperation made its regulations stringent, it was now extremely difficult to keep undeclared money and assets abroad. If we hadn’t provide this opportunity to people, their offshore assets would have been confiscated by foreign authorities, argued Pasha.

But PTI Senator Mohsin Aziz argued that the FBR should have exploited this opportunity by charging up to 50% tax rates for those who would declare offshore assets but would not repatriate to Pakistan.

The government has offered only 2% rate for those who would bring back assets and 5% rates for those who would declare but would not repatriate. On Senator Aziz’s insistence, the committee recommended the government to increase non repatriation rates to 10%, although Aziz wanted 50%.

Chairman Standing Committee Senator Naek initially objected to declaring these Bills as the Money Bill that denies voting right to the Senate. But later on, the committee overlooked this point at the time of approval.

Member Inland Revenue FBR Dr Mohammad Iqbal said that the FBR didn’t have the capacity to capture offshore assets of Pakistanis. Some committee members were of the view that offshore tax cases opening limit should also be at par with local cases that can be opened up to five years.



Pasha explained that private sector members of government-owned bodies cannot avail the amnesty scheme. The committee also approved the Protection of Economic Reforms Bill 2018 that means only income tax return filers can deposit cash in locally maintained Foreign Currency Accounts.

However, SBP Executive Director Dr Inayat Hussain maintained that non-resident Pakistanis who are not income tax return filers can still deposit dollars in their accounts. He said that there was no bar on non income tax return filers from opening foreign currency accounts. 

Published in The Express Tribune, April 25^th, 2018.

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