FBR expects 10,000 to benefit from tax amnesty scheme

ISLAMABAD: The Federal Board of Revenue (FBR) is expecting that the number of beneficiaries for availing tax amnesty scheme for traders will touch 10,000 till expiry of the deadline April 30, 2016, by whitening working capital to the tune of Rs100 billion.

“Through payment of one percent tax under Voluntary Tax Compliance Scheme (VTCS), the FBR is going to collect Rs01 billion into national kitty till expiry of upcoming deadline,” official sources in the FBR told The News here on Monday. So far, the FBR has received 7,900 beneficiaries who deposited Rs760 million by declaring working capital of Rs76 billion under VTCS. 

“We expect that the FBR will cross 10,000 mark in terms of attracting under VTCS till expiry of deadline on April 30, 2016,” Special Assistant to PM on Revenues Haroon Akhtar Khan told The News when sought his comments last week.

He said that the government would take decision after expiry of deadline either to close down the VTCS or grant another extension. “At the time, it is not yet known that whether the VTCS will continue or it will end after deadline of April 30,” he added.

However, the sources said that this scheme would continue for the coming three years for those 10,000 who would avail it by paying one percent tax.

After witnessing complete failure of this latest amnesty scheme, it is now embarrassing for those political-cum trader leaders of the ruling party who have made all out efforts to convince the economic team led by Finance Minister Ishaq Dar that they will bring at least one million traders into the scheme. Now, they are hiding their faces, and the government assumes moral authority to proceed against tax evaders. 

The FBR now requires political will for showing its muscles to those who deliberately prefers to remain outside the tax net despite getting highly incentivised VTCS.

Now, the government will have two options--either to scrap this scheme or extend it by enhancing withholding tax rate from 0.4 percent to its original rate of 0.6 percent on cash withdrawal exceeding Rs 50,000 per day.

In case of ceasing the scheme, the government can launch crackdown against those potential evaders who have made huge transactions by setting example of moving ahead against 100 biggest dodgers to set the pace, but it is yet to see that how much the ruling party grants power to tax collection machinery for moving against tax dodgers in the comity of trading community.

The FBR, the sources said, possessed powers to get details from banks, so they could move ahead against those who made huge transactions but never came into tax net. The tax machinery possessed data from other avenues as well that can help to build up strong legal cases against potential evaders.

Now the time has come to build capacity of tax machinery by granting them autonomy to move against potential tax dodgers; otherwise, the dream of expanding narrowed tax base will remain pie-dream in months and years ahead and the country will have to survive on loans.