Govt mulling 75% rebate for Benami asset holders
Plans to introduce tax amnesty scheme in the third week of April
Prime Minister Imran Khan. photo courtesy: INSTAGRAM/@imrankhan.pti
ISLAMABAD:
Prime Minister Imran Khan has endorsed, in principle, the Assets Declaration Scheme wherein the government is considering offering Benami asset holders an opportunity to regularise their properties by paying 25 per cent of the total worth of the assets.
The government is also considering compulsory jail for tax evasion which may be announced in the upcoming budget that will be presented on May 24.
It plans announcing the tax amnesty in the third week of this month before an anticipated visit of the International Monetary Fund team for a staff-level agreement.
In a meeting that took place at the PM Imran’s Bani Gala residence, Finance Minister Asad Umar briefed the PM on the initial sketch of the proposed tax amnesty scheme, sources told The Express Tribune.
RTO unearths Benami accounts, other tax dodgers
“The government is considering setting different tax rates for different types of assets, with a maximum rate of around 25%,” they said.
It was considering setting the rates in the range of 10% to 25% for offshore, domestic and Benami assets but no final decision has been taken, they added. The authorities were not very keen to offer the tax amnesty scheme on the offshore assets.
The PM would give his final decision about the tax rates, its applicability on offshore assets and the period of the scheme after consulting his advisers.
“The prime minister has made it clear that this will be the first and last tax amnesty scheme during his government’s term,” said Information Minister Fawad Chaudhry while talking to The Express Tribune.
Sources said there was also no decision whether the scheme would be offered by June 30 or it would continue for some time in the new fiscal year.
However, the IMF may not allow the government to continue the scheme under its umbrella, if both the sides reach an agreement.
The finance minister on Friday said the deal with the IMF could be closed during his next week’s visit to Washington. “It is almost a done deal,” said Umar while speaking to the media.
“If both the sides sign the agreement, it is expected to take effect from new fiscal year, starting from July,” said Umar. “Every aspect of the tax amnesty scheme is still being processed and the prime minister has been informed about major points that have so far emerged in discussions.”
The Ministry of Finance wanted to announce the scheme on Friday but due to reservations of the prime minister during the meeting it has been decided to announce it in the third week of this month.
Umar on Tuesday announced to give the first tax amnesty scheme by the Pakistan Tehreek-e-Insaf government on hidden domestic and offshore assets. This would be the Federal Board of Revenue’s (FBR) 11th tax amnesty scheme. All the past tax amnesty schemes have failed to achieve the desired results.
The initial discussions suggest that the government wanted to allow three types of assets to be declared under the tax amnesty scheme. The lowest tax rates will be offered on those offshore movable assets that will be repatriated to Pakistan. The second category of tax rates will be for the domestic assets while the third category will be for Benami assets.
Under the Benami Transactions Prohibition Act, the Benami assets are subject to confiscation and the Benami assets holders are liable to seven years imprisonment. The government expects that maximum people would declare their Benami assets under the tax amnesty scheme.
Umar said people were facing problems because of the application of various laws, including the Benami Transactions Prohibition Act.
The federal government has notified the Directorate General of Intelligence & Investigation (Inland Revenue) as the investigating and prosecuting agency under Section 2(j) of the Anti-Money Laundering Act 2010 (AML Act). The agency will investigate and prosecute the predicate offences in relation to tax evasion under Sales Tax Act 1990; Federal Excise Act 2005; and Income Tax Ordinance 2001.
The sources said that after offering the tax amnesty scheme, the government wants to go after those people who would still prefer to stay outside the tax net.
They said one of the considerations was to announce compulsory jail for tax evasion crime. This might be announced in the budget.
Secondly, the laws could be amended to make it easy to arrest people for tax evasion.
At present, Section 191 of the Income Tax Ordinance says, “Shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year, or both. However, the FBR will have to pass through a long judicial process to get the people arrested.”
Pakistan faces a daunting task of cracking down against tax evasion, as only 1.8 million people file their annual income tax returns.
The direct taxes collection amount to only 37 per cent of the total collection and most of it is collected by levying over 72 kinds of withholding taxes.
Prime Minister Imran Khan has endorsed, in principle, the Assets Declaration Scheme wherein the government is considering offering Benami asset holders an opportunity to regularise their properties by paying 25 per cent of the total worth of the assets.
The government is also considering compulsory jail for tax evasion which may be announced in the upcoming budget that will be presented on May 24.
It plans announcing the tax amnesty in the third week of this month before an anticipated visit of the International Monetary Fund team for a staff-level agreement.
In a meeting that took place at the PM Imran’s Bani Gala residence, Finance Minister Asad Umar briefed the PM on the initial sketch of the proposed tax amnesty scheme, sources told The Express Tribune.
RTO unearths Benami accounts, other tax dodgers
“The government is considering setting different tax rates for different types of assets, with a maximum rate of around 25%,” they said.
It was considering setting the rates in the range of 10% to 25% for offshore, domestic and Benami assets but no final decision has been taken, they added. The authorities were not very keen to offer the tax amnesty scheme on the offshore assets.
The PM would give his final decision about the tax rates, its applicability on offshore assets and the period of the scheme after consulting his advisers.
“The prime minister has made it clear that this will be the first and last tax amnesty scheme during his government’s term,” said Information Minister Fawad Chaudhry while talking to The Express Tribune.
Sources said there was also no decision whether the scheme would be offered by June 30 or it would continue for some time in the new fiscal year.
However, the IMF may not allow the government to continue the scheme under its umbrella, if both the sides reach an agreement.
The finance minister on Friday said the deal with the IMF could be closed during his next week’s visit to Washington. “It is almost a done deal,” said Umar while speaking to the media.
“If both the sides sign the agreement, it is expected to take effect from new fiscal year, starting from July,” said Umar. “Every aspect of the tax amnesty scheme is still being processed and the prime minister has been informed about major points that have so far emerged in discussions.”
The Ministry of Finance wanted to announce the scheme on Friday but due to reservations of the prime minister during the meeting it has been decided to announce it in the third week of this month.
Umar on Tuesday announced to give the first tax amnesty scheme by the Pakistan Tehreek-e-Insaf government on hidden domestic and offshore assets. This would be the Federal Board of Revenue’s (FBR) 11th tax amnesty scheme. All the past tax amnesty schemes have failed to achieve the desired results.
The initial discussions suggest that the government wanted to allow three types of assets to be declared under the tax amnesty scheme. The lowest tax rates will be offered on those offshore movable assets that will be repatriated to Pakistan. The second category of tax rates will be for the domestic assets while the third category will be for Benami assets.
Under the Benami Transactions Prohibition Act, the Benami assets are subject to confiscation and the Benami assets holders are liable to seven years imprisonment. The government expects that maximum people would declare their Benami assets under the tax amnesty scheme.
Umar said people were facing problems because of the application of various laws, including the Benami Transactions Prohibition Act.
The federal government has notified the Directorate General of Intelligence & Investigation (Inland Revenue) as the investigating and prosecuting agency under Section 2(j) of the Anti-Money Laundering Act 2010 (AML Act). The agency will investigate and prosecute the predicate offences in relation to tax evasion under Sales Tax Act 1990; Federal Excise Act 2005; and Income Tax Ordinance 2001.
The sources said that after offering the tax amnesty scheme, the government wants to go after those people who would still prefer to stay outside the tax net.
They said one of the considerations was to announce compulsory jail for tax evasion crime. This might be announced in the budget.
Secondly, the laws could be amended to make it easy to arrest people for tax evasion.
At present, Section 191 of the Income Tax Ordinance says, “Shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year, or both. However, the FBR will have to pass through a long judicial process to get the people arrested.”
Pakistan faces a daunting task of cracking down against tax evasion, as only 1.8 million people file their annual income tax returns.
The direct taxes collection amount to only 37 per cent of the total collection and most of it is collected by levying over 72 kinds of withholding taxes.