Cabinet approves tax amnesty scheme
Two days after the government reached an agreement with the International Monetary Fund (IMF) about a $6bn bailout, the federal cabinet under the chair of Prime Minster Imran Khan on Tuesday approved the its first tax Amnesty Scheme.
Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh accompanied by Federal Board of Revenue (FBR) Chairman Syed Shabbar Zaidi, Minister of State for Revenue Hammad Azhar and Special Assistant to the Prime Minister (SAPM) on Information and Broadcasting Dr Firdous Ashiq Awan briefed the media on the scheme.
“We have tried to make this scheme very easy to understand and implement,” the adviser said at the news conference, adding that the scheme has realistic targets with low rates.
“The basic purpose of the scheme is not to generate revenue but to document the economy and to bring dead assets into the economy and make them functional.”
The philosophy behind the plan is not to “intimidate” people but to encourage businessmen to participate in the legal economy, the adviser said.
He said people will have the opportunity to become part of the scheme until June 30. Every Pakistani citizen will be able to avail the scheme except for public office holders and their dependents.
Under the scheme, the finance adviser revealed, assets within the country and abroad can be whitened after paying a certain amount. For the whitening of properties, the value will be considered 1.5 times more than the FBR-assigned value.
A rate of 4pc will be charged for whitened money and the cash will have to be brought into Pakistan to be kept in banks. For people wanting to keep their money abroad, a rate of 6pc will be charged.
Responding to a question, Dr Shaikh said the IMF programme entered into by Pakistan is in favour of the country. “Those who are opposing the IMF programme are the ones who had already done the same,” he added.
He said actions such as reducing the gap between imports and exports, reducing losses of state-owned entities and curtailing expenditure are in favour of the country.
Dr Shaikh said some people were apprehensive that the electricity tariff will be increased under the IMF accord. He clarified that if that is done, those who consume less than 300 units will not be affected.
“Pakistan has been going to the IMF again and again because it failed to increase its exports, foreigners remained reluctant to invest in the country, large state institutions remained loss-making and revenue mobilisation was not done [effectively].”
Answering a question about how this scheme is different from the ones offered in the past, state minister Azhar said unlike the past amnesty schemes, the one being introduced now makes it mandatory for people declaring assets to become tax filers.
He said the scheme was not being offered to generate revenue and contains an option for businesspersons to revise their balance sheets.
The amnesty scheme was first expected to be approved on April 8. But it could not be approved in two meetings of the federal cabinet last month, before the exit of then finance minister Asad Umar.
Following the appointment of Dr Shaikh as Adviser to the Prime Minister on Finance, the government had said its proposed amnesty scheme would go ahead without any major change despite a change of command and internal opposition.
The adviser on finance desired that it should be a people-friendly scheme, helped document the economy and brought more non-filers into the tax net instead of just generating funds. He directed the FBR to fine-tune the scheme to make it simple to understand and easy to implement, an official statement said, adding that the objective of the scheme should be to make the economy more tax-compliant and documented.