Explaining Pakistan’s ‘greatest’ tax amnesty scheme

FBR Member Inland Revenue Policy Dr Mohammad Iqbal, Senior Partner of A F Ferguson Shabbar Zaidi speak on the issue


Our Correspondent June 11, 2018
Tax experts and the Federal Board of Revenue (FBR) have tried to address their concerns PHOTO: EXPRESS

KARACHI: As wealthy people remain reluctant to come forward to take benefit from the domestic and offshore tax amnesty scheme due to their apprehensions, the tax experts and the Federal Board of Revenue (FBR) have tried to address their concerns.

Mansoor Ali Khan, the host of ‘To the Point’, has discussed these obstacles and challenges with FBR Member Inland Revenue Policy and official spokesperson Dr Mohammad Iqbal, Senior Partner of A F Ferguson & Co Shabbar Zaidi, and The Express Tribune Economic Correspondent Shahbaz Rana.

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Mansoor Ali Khan

I welcome you to the programme To The Point. Viewers, this morning I received a message on my mobile from the FBR in which it said that if you want to maintain your social status and mental peace, you should take advantage of the amnesty scheme by taking relief on your assets till June 30. And then my mind started raising many important questions on the topic. I searched for many news stories. The government announcements and their implementations were not so clear and understandable.

I thought if the persons who are always associated with the world of news day and night and not able to understand and are confused on the outlines of the scheme, can a layman or a businessman understand the scheme properly? After this notion and setting aside the political debates, I decided to run a programme on this topic of national importance and contacted the experts of the field so that the complexities of this tax amnesty scheme could be solved. The scheme will increase the tax net and bring the wealth that is in the country or abroad, but is not in the tax net, into the tax net.

How can this happen? How will people with such wealth trust this scheme and can this help bring the national wealth into the country? It is time that the national wealth returns to the country and perhaps for this the PML-N government has announced a one-time tax amnesty scheme just before leaving. Now, the next phase is the implementation of the scheme. How will it be implemented and how will the confidence on the scheme be shown? Will it benefit the national exchequer or not?

We have here, to find us the answers to these questions, FBR spokesperson Dr Muhammad Iqbal, senior economic analyst Shabbar Zaidi and The Express Tribune’s Senior Reporter Shahbaz Rana. Thank you to all of you for coming.

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I want our analysts to guide us. The questions regarding this amnesty scheme, people associate in Pakistan with industry, business community, or other fields. They want that the benefits of the scheme could be taken. But there are ambiguous areas to be clarified where we need clarity.

First of all, I shall put a question for Dr Muhammad Iqbal. This forms a basic question, which I think most people would want to ask. If this can be benefitted from, do the tax authorities ask about the source of the property and assets; where did the money come from?

Dr Muhammad Iqbal

Mansoor sb the very basic purpose of the scheme is that the beneficiaries of the scheme who will declare their assets or income, they cannot not be asked about the source of the income that was used to create these assets. This is the basic purpose of the scheme. The problem is that in an ideal world, there should be no need of such a scheme where every taxpayer tells their real income and assets but practically we have a large undocumented sector about both, the domestic assets and the foreign assets. Therefore, the very basic purpose of the scheme is to give one opportunity to the people so that they could once declare the things that they did not mention in their tax record and so regularize so that they could save themselves from any kind of consequences.

Mansoor Ali Khan

Dr sb another questions that comes in is a big list that appeared in Panama Leaks in which there are many names. If someone has their name in the Panama Leaks, and they want to benefit from this tax amnesty scheme, can they benefit from the scheme as well?

Dr Muhammad Iqbal

Look, this scheme has some exceptions, major being that the holders of public office cannot benefit from it. Like government employees or those who have enjoyed a political office. They cannot avail this scheme. The second important exception is that the cases, which are under proceedings in any court of law, also cannot avail this scheme. On the other hand, it does not matter that there is any mention in the Panama or not.

Mansoor Ali Khan

Shahbaz Rana sb, you heard this discussion. He said that a person can benefit, no matter their name appears in the Panama if it is not under litigation or no legal proceedings are under way. Then there is no problem. Also there is no problem for a public office holder. But there have been lot of confusions during the last ten years about the public office holders, what do you think?

Shahbaz Rana

Yes, you are very much right. You see that the scheme is effective from April 10, but people have some reservations in their minds regarding it so far. The people who want to take advantage of this scheme think that it is a very unique opportunity. The basic reason is that we have an agreement with OECD and from September 2018 Pakistan will start exchanging information with OECD. So, this is like a window of opportunity that is ending on June30, because there is very little time left, questions are arising in the minds of the people. The basic question is who can benefit and who cannot? They have said that the public office holders who held office for the last ten years cannot benefit from it. As Dr Iqbal said that everyone can benefit if even if their names appear in Panama Leaks but if their case is not in court. I want to ask Dr sb an important thing and that is that would it be mandatory for a non-resident Pakistani with a dual nationality to declare wealth statement to benefit from this scheme?

Dr Muhammad Iqbal

Look, filing or not filing the wealth statement is not the issue under the scheme. Wealth statement has to be filed according to the requirements of the Income Tax Ordinance, which is that everyone who files an income tax return will have to file wealth statement along with that. And being a dual national also does not matter. The basic concept of income tax is of a resident taxpayer. And the resident taxpayer individual is a person who has lived for at least 183 days in Pakistan in a tax year, which is also a financial year. If he has lived in Pakistan for 183 days, he has to declare his total world income in his tax return and he also has to give his wealth statement with that. But if he is not a Pakistani resident, then if he has any Pakistani source income, he has to pay tax on that.

This is an international taxation concept so that double taxation could be avoided. So, there is no requirement about filing or not filing of wealth statement in the scheme. That is mentioned in the general provisions of the income tax ordinance. A new thing that we have done this year through Finance Act 2018 is that in addition to that a statement of foreign assets and income statement has also been made mandatory by law for all those resident tax payers who have either foreign income or [assets]. First of all that person has to be a resident tax payer. If he is an expatriate Pakistani who is working in a foreign country, that statement is not mandatory to file for him. But if he is a resident Pakistani and he has more than $10,000 of income per year from abroad or he has assets of more than $100,000, he has to submit statement of foreign assets as well. Perhaps this is causing confusion of wealth statement and other statement. Wealth statement is to be filed independently and the statement of foreign income and assets is independent and only for those who have assets or income abroad.

Shahbaz Rana

Mansoor sahib, there is a small technical point to mention here. A non-resident Pakistani has been a non-resident since the past two years, and as per the FBR law, you can go back up to the past five years. So, a current non-resident Pakistani of today used to be a resident Pakistani three years ago. So, would it be necessary for him to declare his wealth statement and bank balance?

Dr Mohammad Iqbal

Well, the wealth statement is an annual feature. It is an annual feature and one has to give wealth statement in the year in which he was resident Pakistani. The foreign assets statement, which I told you, has to be furnished from the subsequent years. The statement for previous years is not needed at all. When one will file his return, then FBR will ascertain his status whether he is a resident or a non-resident. If he was a resident in the preceding years, but not a resident in the current year (when he has to file a return along with this statement), then my view is that he would not be required to furnish that statement.

Mansoor Ali Khan

Let’s take this discussion forward. There are a few scenarios, which we need to have commented upon by Mr Mohammad Iqbal. Scenarios like such may include, for example, a person who holds a trust abroad, but if the beneficiaries of that trust is anyone else, and he himself does not know when exactly the funds of the trust will be transferred, then how can the amnesty scheme be helpful for them? We will raise this question after a break. Stay with us.

Welcome back after the break. We have different questions pertaining to the amnesty scheme. Let us move with more questions. The spokesperson for FBR is here with us. In addition, we have Shabbar Zaidi with us and senior reporter Shahbaz Rana is also with us on board.

Dr Iqbal, please elaborate for us regarding the tax investigation. Suppose an investigation is being carried out for an individual, be it in the form of audit, or through a court of law. Can such individuals drive advantage from this amnesty scheme?

Dr Mohammad Iqbal

Well, as I told in you in the start, if any individual’s case is being dealt with in any court of law, then he is not entitled to avail to the amnesty scheme. But ‘court of law’ does not mean our offices. If any of our own office, subordinate office or field office is carrying out investigations for a given tax case, then that case will not be seen as a case for pending in a court of law. This law has stated definition for court of law. So, in simple words, it implies that if someone is getting his accounts audited, he may be able to avail this amnesty scheme.

Mansoor Ali Khan

Alright, we had also talked about public office holders. I have a different question in mind, which I would ask. You have said that amnesty cannot be availed by anyone who has had held public office in the past 10 years. Now, if a public office holder has served an office where he had been allowed to make private investments, or any business activity of that kind, would the condition be the same for him, isn’t any flexibility available for him?

Dr Mohammad Iqbal

Well, there is a full, comprehensive definition for it. When this scheme was introduced through an ordinance, the definition was there. And then when this was changed into an act, some further clarification was incorporated into it. I do not have the scheme with me right here, otherwise I would have told you the change. Those people who sit on the board of directors of any publicly-owned corporation but are not related to their management, like many state organisations we have. Sometimes, such directors are appointed from the private sector, who are not connected with the day-to-day running of the corporation.  They just attend meetings comprising board of directors. Then in such situation, those people can avail the amnesty scheme.

The whole purpose of all this is that anyone who has been dealing with public money in any form, the one who has had an opportunity to have misused the money, such individuals are kept out of the scheme. The concept and philosophy behind the scheme has been reinstated with the definition for public office holder. If any further clarification is needed, or there is any specific instance, then we can clarify that too.

Mansoor Ali Khan

Shahbaz Rana, I would also like to you to comment on the amnesty returns in this regard. What do you think is the appropriate way to dismiss the case for return? Can appeals be filed in such cases?

Shahbaz Rana

Well, there are two or three very important questions that need to be clarified by Dr Iqbal. One of the questions is that if you have given a specific form and then there is a mistake in that form can FBR scrap that form or the return? If FBR can scrap that then the filer, who has been filing that form, will he be given a second opportunity to file the form again? The second thing, which needs to be explained here, is that suppose I have already filed the form, then do I get the option to amend any mistake which I have made in the form?

Dr Mohammad Iqbal

Well, I must explain this thing first that in general, amnesties introduced in the past had forms that were rejected on the basis of valuation. For example, you have declared a home located in any city, then the scheme used to have a given mechanism for valuation, and in that there was a possibility of disputes as our officers would say that the valuation you have made is not reasonable, or that it should be different. So in order to make the current scheme successful, we have ensured that FBR does not have the discretion to determine valuation. The valuation would be taken as one declared by the filer.

As for your second question, that is whether the law gives the filer the option to revise or amend his submitted forms, then the first thing to mention here is that the law does not have anything specifically related to it, whether a submitted form can be revised or amended. Normally, whenever we talk about revising any declaration, then the law does not specifically mention whether it can be revised or amended. Normally, when we talk about revision of a declaration, then the law gives a specific power for it. For example, if someone has to revise his income tax return, then the income tax law states that under specific situations income tax returns can be revised. Similarly, the law also states conditions in which wealth statements can be revised. Here, the related laws pertaining to revision are not given for amnesty declaration. So for, now we can only recommend whoever wishes to avail the amnesty scheme should be careful while filing their declaration and do it only once. But in situations like this, we do consider whether we can give provision for any revision or not. As of now, however, my understanding says that it cannot be revised.

Mansoor Ali Khan

So in this regard, we could have no appeal after June 30? No amendment can be made once the case is submitted. It does not have anything to do with the deadline, right? It does not matter whether it is prior to the deadline or after it, doesn’t matter?

Dr Mohammad Iqbal

Yes, definitely. There is no point of a later on. If you cannot file a new declaration, then how would you be able to revise? But I am just saying that perhaps there is no chance of revision even before the due date.

Mansoor Ali Khan

There are some more scenarios in this case. Mr. Shabbar Zaidi will also enlighten us in this regard, asking him how he sees any such scenarios and particular situations and how they could be dealt with. We will discuss this after a small break.

Viewers, welcome back after the break. We are talking about the tax amnesty scheme. FBR spokesperson Dr Muhammad Iqbal is here with us. He has been elaborating on different scenarios. Dr. Iqbal, there is an important point to discuss here, as previously talked about Panama papers. Now for example there is a trust, the beneficiaries of that trust do not even know when the funds of the trust would be transferred on their name, or when would they become the beneficiary of the trust. So in a situation like this, how can such a person drive benefit from the amnesty scheme?

Dr Mohammad Iqbal

First of all, allow me to comment on the point given by Mr. Shahbaz. I would like to further clarify it. The thing, as stated by Mr. Shabbar, is that these two laws regarding foreign amnesty and domestic amnesty have come through the Finance Act. In the Finance Act, there have also been amendments pertaining to Income Tax Ordinance, which deals with offshore taxation, an international aspect of taxation. So perhaps there is some confusion over here that we are trying to read all those things together.

Basically, there have been some amendments in the Income Tax Law as well as Protection of Economic Reforms Act (PERA), 1992. The purpose of the amendments is that the government wants that the regime, which it presently sees is changed, especially the one related to flight of money. On one side, people are barred from taking money so freely, without having it declared and without any understandable reason. On the other side, we wanted to make a tighter regime as well as improve our detection abilities. If we have any such investments outside the country, they would come in our knowledge as well. So some of it is due to changes in international regime, and then we also place certain consequences for it. If someone takes the money out without declaring the income, then the new amendments will also apply to them. The amendments will impact those who still do not truthfully declare their assets making use of these schemes and driving benefit from them.

My request is that the amendments made in the Income Tax Ordinance and Protection of Economic Reforms Act should not be seen as part of this scheme. That is a separate part of our overall efforts, which is directed to improve our taxation system. The first step in this regard is that people are given the opportunity to sort out their affairs and bring them in order. Those who still do not comply will be dealt by us.

Mansoor Ali Khan

Dr Iqbal, I want you to comment on the scenario which I am stating.

Dr Mohammad Iqbal

Sure, but in order to create understanding for the trust scenario, the scope of the income tax law must be clear first. We should be clear about the things, which our amnesty is covering. Basically, the income tax law states that if someone has made any form of investment, or he has assets or a record of expenditures for such, the source of which cannot be explained by him, then such concealments has some consequences. We would treat them as income and levy taxes on them. Such individual will also be liable for penalty. Now, basically the amnesty is given only for the condition where an individual has made any investment the source of which were not declared by him, then declare that investment and we will not ask about the source. So, for any amount for which a taxpayer or an individual is not liable in the first place, then he may not need to take any amnesty for it.

Mansoor Ali Khan

Dr Iqbal, my question remains that there is a beneficiary, who does not even know when the funds will be transferred to his name, or when he will get them. He is the beneficiary of that trust. Now in such a situation, how can he drive benefit from the given scheme? Can the benefit be driven in some future time or not?

Dr Mohammad Iqbal

Well, basically what I am trying to explain is that the amount, which has been invested by any individual, only that amount can be applicable for amnesty. If he has not invested any amount or that the investment belongs to any other person and he has been kept as a beneficiary for that person, then the question will be asked to the person who has actually made the investment. A person who has not made any investment does not fall in the radar; we are not even authorized to probe him. He had no liability of his own. Here, the amnesty could be availed by someone who has made any sort of investment. Even if he has made the investment in anyone else’s name, he is still entitled for amnesty.

Mansoor Ali Khan

Mr Shabbar Zaidi, I would like you to contribute in this regard.

Shabbar Zaidi

Let me explain here that if you read the amnesty law, it clearly has a definition for foreign assets. In that definition, foreign assets include beneficial interest, or owner in a foreign entity or a trust. Now here, as per Pakistani law, trust is regarded as a company. Mr Iqbal has stated the exact thing that our amnesty is on the source of income rather than on the person holding the beneficial interest.

Every trust has three types of people: trustee, settler and beneficiary.

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So the settler who has paid the money will be the person who would declare the investment as his assets. If you read the amnesty scheme, it also states that contribution to a trust is also an asset. So if the declaration is in the name of the settler, the settler declares this as his assets. It is his own income until he transfers the same to the name of the beneficiary. However, if the settler does not disclose the same as his income, or when he is satisfied and that his share has been identified and then he says that he has no right on the investment, then the beneficiary can too declare the investments on his name. There is no confusion regarding it, you need to carefully read the law pertaining to trustee, settler and beneficiary. This matter is clearly covered in amnesty laws’ definition of foreign assets.

Mansoor Ali Khan

Dr Iqbal, since you are the spokesperson for FBR, don’t you think whatever Shabbar Zaidi is saying has added clarity. Don’t you think so?

Dr Mohammad Iqbal

You have raised this issue so I must state that that our FBR website has a section for frequently asked questions. It has already answers for some questions.  And we will try that any issues identified here will be included there, so confusion, if any, will be completely removed.

Mansoor Ali Khan

Mr Shabaz Rana, in this regard it must be mentioned that there are a lot of trusts which exist in the form of offshore companies. Owners of those trusts frequently ask questions regarding this. They want to know how they can drive benefit from this amnesty scheme. So is it clear that the trustees or the operators of such trusts will consider this declaration as quite important and so they can take benefit from this scheme, but the beneficial owners, who are entitled for benefits in the future, can only capitalise on this scheme when they actually get the benefits of their trusts?

Shahbaz Rana

Yes, of course. Mr Shabbar and Mr Iqbal explained this in detail. Most of the responsibility lies on the settler and on the beneficiary to the extent where his portion has been declared. As you know Mr Shabbar and Mr Iqbal, there are two types of trust. One is revocable and the other is irrevocable. The treatment in both the types is different. Do we have to keep that treatment in the context?

Shabbar Zaidi

See, there are different forms of trust. One is the revocable trust and the other irrevocable. The trust that you are talking about is the irrevocable trust. Technically, the irrevocable trust has not been transferred. There are two, three different types of form in the irrevocable trust. One is the discretionary trust in which the settler says that it is my discretion where the money has to go.

The other is the non-discretionary trust in which the settler says that I have given the money and the money will go to Mr Shabbar and Mr Shahbaz half/half. This is called the non-discretionary trust. The discretionary trust will be declared in the name of the settler and where there is non-discretionary trust and the beneficiary is identified, then the amnesty is present that the beneficiary may declare it in his name. The trust law and the settler law are very clear on this. And like I made it clear that in amnesty, I will say it again that it is written in the definition that beneficial interest and owner in a foreign trust is also a foreign asset.  Am I clear in what I am saying?

Mansoor Ali Khan

Yes, it is clear.

Shahbaz Rana

Yes, yes it is clear Mr Shabbar.

Mansoor Ali Khan

There are other questions. Dr Muhammad Iqbal I would like to ask about foreign exchange funds that if they are present in any local account and if advantage of the scheme can be taken, then after how much time can the funds be moved out as per the ruling. What do the terms and conditions say in this regard?

Dr Muhammad Iqbal

As far as I have understood you are talking about the domestic foreign currency accounts in which someone has money.

Mansoor Ali Khan

Yes.

Dr Muhammad Iqbal

First of all they will not come in foreign amnesty. They will be declared in our domestic scheme. And if someone wants to declare a domestic asset then its rate will be 5% but if someone has a foreign currency account and he wants to declare some money from it, then he will have to convert it in rupees or he will have to invest in the state bank bonds. In this situation he will have to pay 2%. If he wants to avail that money and he converts the foreign money into rupees then obviously the question of that money going out of the foreign exchange will be finished. Similarly, if he invests in bonds issued by the state bank, then after the maturity of the bonds as far as my understanding is concerned, he will be paid in rupees according to the foreign currency rate at that time.

Mansoor Ali Khan

Then this means that the foreign exchange under all conditions has to get converted? Without that there is no question of funds going out? Even if he has taken amnesty scheme?

Dr Muhammad Iqbal

If they are in domestic.

Mansoor Ali Khan

Yes.

Dr Muhammad Iqbal

If they are in Pakistan in foreign currency accounts. If they are in accounts abroad then option to take out is present. If they bring it to Pakistan, and they invest it in bonds or convert it, then 2% tax will have to be paid. And if they want to keep that foreign exchange out of Pakistan, and only want to declare it, then they have to pay 5% tax on it.

Mansoor Ali Khan

I will slightly change this form. Please help me in this regard. There is a person whose foreign currency accounts are out of Pakistan and he wants to bring those funds to Pakistan, and wants to avail this amnesty scheme. And then he wants to take these funds abroad once again. What is the process for this and what facility is present for him?

Dr Muhammad Iqbal

No……according to me, if he has the option that he can keep it abroad and also declare it, then I think there would be no need to adopt such a convoluted route that he bring that money to Pakistan and then converts it into rupee from state bank. If the money comes to Pakistan, then it will be converted into rupees.

Mansoor Ali Khan

Okay.

Dr Muhammad Iqbal

They will be invested in the state bank’s bonds. That is why a reduced concessional rate has been given of 2%. And if that same foreign exchange is kept out of Pakistan then there is a rate of 5% on declaring it. This incentive has been given due to the reason that the foreign exchange comes back to Pakistan and is included in the state bank’s reserves.

Mansoor Ali Khan

Okay. Mr. Shahbaz…

Shahbaz Rana

Doctor Sahib, a little clarity is required over here. If I am a local and a resident of Pakistani and I have a foreign currency account and I have not declared it. If I declare it tomorrow and I have $500,000 in it and I pay you 5% or whatever rate has been imposed. According to the foreign currency account’s law, I can take that money through the foreign currency account to abroad like I did it before. I can take it abroad again in the future in terms of dollars. There should be no restriction on it?

Shabbar Zaidi

Can I answer it? Can I give an answer?

Dr Muhammad Iqbal

Yes, yes. There is no restriction on it. I was only talking of a concessional rate according to which you can declare it only on 2% but if you are going to pay 5% rate. Then the normal laws of state bank will apply on it because this is not an issue of FBR. State Bank regulates the money going out.

Mansoor Ali Khan

Mr Shabbar Zaidi wanted to say something. Yes, Mr Shabbar Zaidi.

Shabbar Zaidi

Mr Shahbaz Rana’s confusion is that he thinks after the amnesty declaration, the movement of money has stopped, which is wrong. Mr Iqbal is saying the right thing. Two things are being mixed up. One is the Protection of Economic Reforms Act and this is different from amnesty. If he has declared amnesty in foreign currency account then the law that is applicable on foreign currency account to bring and move money is different but he has the right to take it back abroad and there are no bars or any conditions. The old law and the law made today for foreign currency account will remain. There are no bars but the way Mr Iqbal said it before some changes have been made in the Protection of Economic Reform Act in which rupee feeding is not allowed now under the foreign currency account. So if there is an already existing account that enjoys amnesty then there is no restriction on that money to take abroad.

Mansoor Ali Khan

Okay and Dr Sahib there is no specific time limit on it? According to the state bank laws, the movement of money can take place at any time?

Dr Muhammad Iqbal

Theoretically, it can be done the other day too.

Mansoor Ali Khan

There is one very important question. Some time ago, the people who had filed their income tax returns late, I am talking about three to four years ago, those who had filed their returns late have also been sent tax audit notices. In this situation, the people are worried about the amnesty scheme. They fear that if they avail the amnesty scheme, the FBR may start opening up their other accounts. In this regard if any person discloses his foreign bank accounts, will the FBR and the government also investigate other accounts or starts interrogation or an audit?

Dr Muhammad Iqbal

See the audit notices that came on late return filed were providing in the law. The purpose was to propagate a culture where people comply in time. That is why it was kept in the law that those who file returns after the due date or on the extended date or the commissioner’s extended date, they will be automatically selected for audit. That was experimented for three years and this year the law has been abolished. If now someone files return late then there will be some other consequences but his account will not be selected automatically for audit. The notices that were sent were according to the law. The notices used to go according to the law made by the parliament. In this scheme, we have not given any such discretion to our officers that they can reject it on the basis of technicality or give a notice. Efforts have been made like Mr Shabbar Zaidi told you earlier that their input and the input of business industry and tax professional are included. So the efforts have been made to make this scheme so friendly that a proper response can be availed on it.

Apprehensions can be made on anything but I would like to give the comfort that there is no basis for such apprehensions.

Mansoor Ali Khan

Sir I am coming to you. Dr sahib this is my question that if anyone avails the amnesty scheme, then can the FBR at least guarantee them that their audits will not start. Your investigation will not start.

Dr Muhammad Iqbal

No. If some existing taxpayer also takes advantage of the amnesty scheme, then the rest of his tax affairs that could be audited before if the amnesty had not even come, then their audit selection has to be made according to the general law of the land. What are we giving amnesty about? It has not been stated in the amnesty law that the person’s audit later in life will never take place. Amnesty is about those assets that he has declared. If he has a business, then don’t take the right away from the FBR that business won’t be audited.

Mansoor Ali Khan

I am talking about the mindset. I am trying to explain the mindset. I am talking about today’s businessman who thinks that if I take advantage of the amnesty scheme I should not come in that list in which the FBR starts thinking that since he has hidden some things he may also have hidden other things such as accounts, funds or assets. Then should this be audited differently? This is my question.

Dr Muhammad Iqbal

No. There will certainly be no such thing. We will not do any adverse thing to any person who has just taken advantage of the amnesty scheme. In fact, the presumption would be that since he is declaring everything, all the tax problems that were present will have been solved.

Mansoor Ali Khan

Okay. Mr Shabbar Zaidi you were saying something.

Shabbar Zaidi

See, in this regard I think that we have clearly clarified the law. There is section No 14 of the amnesty scheme, which says that declaration not admissible as evidence. The section 14 of the amnesty declaration act says that what I have declared in the amnesty cannot be used for any prosecution. So this is the wrong assumption of the businessmen who think that if name comes then declaration would be used. A special section has been inserted in the law that states that what has been declared in amnesty cannot be used at all as evidence. The law has made that and it has been especially written that for Income Tax Ordinance 2001, that thing cannot be a reason for any prosecution. There cannot be a greater amnesty protection than this.

Mansoor Ali Khan

Dr Iqbal, there is another scenario in which, please guide me. For example, there is a foreign account for which three to four signatories are present. There are husband, wife and children present or brothers and sisters. In this situation, if one of the people avails the amnesty scheme, then is that enough or all the signatories need to avail the amnesty scheme? Or one is enough?

Dr Muhammad Iqbal

See if there is one balance present in that account, or suppose he has not availed the amnesty scheme and we found out through the sources, then we will not tax that balance four times because it is being held by four people. One person may declare that account or all the four who have a share that can be ascertained may do it separately; still that amount has been explained on that date whether said by one person or by four. This cannot happen that we tax an amount four times. Either that will be taxed all in one or it will be divided into four parts, but still it cannot be taxed four times.

Mansoor Ali Khan

So if one declares it is enough. Thank you our guests for guiding us. All those people who were watching this show on their TV screen and all those who want to take advantage of the tax amnesty scheme should definitely come forward because all analysts agree on one view in this regard that a better tax amnesty scheme never came before. They have given the date of June 30, and you can take advantage of that before whether you are in Pakistan or aboard or whether your assets are in Pakistan or abroad.


translated by arshad shaheen, faisal arshad and samir ayub


Published in The Express Tribune, June 11th, 2018.

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COMMENTS (1)

Karachiite | 3 years ago | Reply Thank you Express Tribune for taking up this issue and trying to resolve the issue. Panelists invited are of great stature. After this exhaustive debate, issue is as confusing and complex as ever.
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