ISLAMABAD: Pakistan has managed to convince about 75,000 of its citizens to avail domestic and offshore tax amnesty schemes and these citizens have also paid Rs120 billion in taxes, show provisional results.
The offshore and domestic tax amnesty schemes expired on Tuesday after the Federal Board of Revenue (FBR) did not give another extension. The FBR offices remained open till midnight to facilitate the Pakistani citizens who availed this scheme.
Although the final figures were not available till the filing of the report, sources in the FBR said till 10.00 pm about 75,000 individuals had availed these schemes, paying Rs120 billion in taxes on the value of assets that the people declared under offshore and domestic amnesty schemes.
The last PML-N government had announced the scheme to allow people to declare their hidden domestic and offshore assets amid a drive against tax evasion by the Organisation for Economic Cooperation and Development (OECD).
It had offered Pakistanis to declare their offshore assets at 5% tax rate. For repatriation of liquid assets to Pakistan the rate was only 3%. For disclosure of the domestic hidden assets, the government had determined 5% rate.
The scheme was also expected to provide a boost to the country’s depleting foreign currency reserves. However, the objective of providing a cushion to the forex reserves could not be achieved.
Pakistan faces a daunting task of cracking down against tax evasion, as only 1.3 million people file their annual income tax returns. The direct taxes collection amount to only 39% of the total collection and most of it is collected by levying over 75 kinds of withholding taxes.
The sources in the FBR said in July alone about 20,000 more people availed the scheme and they paid Rs30 billion in taxes. This also gave a boost to the FBR’s tax collection in July. Against the monthly target of Rs224 billion, the FBR provisionally collected Rs255 billion in taxes, said the sources.
The monthly collection was Rs44 billion or 20.8% higher than the same period of the last fiscal year. Out of Rs255 billion, the customs duty collection stood at Rs52 billion, which was also higher than the monthly target.
The FBR has managed to take a decent start of the new fiscal year despite it being the month of general elections. The caretaker government had also changed the FBR chairman.
Excluding the impact of the tax amnesty scheme, the FBR’s provisional monthly collection stood at Rs225 billion, which was higher by 6.8% over the collection of July 2017. The FBR also paid Rs10 billion in tax refunds.
The last National Assembly had approved Rs4.435 trillion annual tax collection target for the FBR. The tax machinery requires 18.2% growth rate to achieve this target, as the FBR closed the last fiscal year at Rs3.751 trillion.
The FBR’s tax policies may undergo drastic changes in coming weeks, as the Pakistan Tahreek-e-Insaf has expressed its dissatisfaction over the manner the tax machinery was run by the last political dispensation.
There is huge scope in improving the tax collection, as the country faces revenue losses due to under invoicing and smuggling of consumer goods. The Tax Reforms Commission has also suggested measures to curb smuggling and under invoicing.