ISLAMABAD: The Federal Board of Revenue has issued draft Assets Declaration (Procedure and Conditions) Rules 2019 under Section 15 of the Assets Declaration Ordinance, 2019. The draft rules have been issued by the FBR seeking objections and suggestions by 22nd May. The draft rules are aimed at providing a mechanism for filing declarations under the Amnesty Scheme 2019 issued through a Presidential Ordinance. According to tax experts Section 15 of the ordinance, under which the draft rules have been issued, does not provide for previous publication of rules to be issued under the ordinance, unlike sub-section (3) of section 237 of the Income Tax Ordinance 2001 which deals with issuance of Income Tax Rules and provides that rule making power under the Income Tax law is subject to the condition of previous publication.
The FBR probably lost sight of the fact that rules for the amnesty scheme are not being issued under the Income Tax law and hence there was no requirement of issuance of draft rules and seeking objections and suggestions on these rules, experts say.
This exercise will result in delay in the issuance of final rules and further curtail the available time for people to file their amnesty declarations, as the last date for this purpose is 30th June.
Tax experts have also stated that as already mentioned in a report published in this newspaper on 17th May 2019, the ordinance suffered a major flaw in that it does not contain any provision providing a waiver to the persons availing themselves of the scheme from payment of the due taxes under the relevant tax laws.
Now the FBR has tried to make amends for this omission by introducing Rule 6 in the proposed rule granting the required amnesty. However, in the opinion of experts this is a substantive right that cannot be provided through rules; this opinion is strengthened by the fact that these rules are being statetedly issued for providing the procedure and conditions for filing declarations and paying tax under the scheme and granting immunity is beyond the scope of the rule making powers.
The draft rules also do not provide the form for filing declarations and it has only been mentioned that it will be in the format available on the FBR website.
In the opinion of the experts, forms are normally made a part of the rules and postponing the preparation of the format may cause further delays.
Although it was pointed out that liquid assets other than cash cannot be deposited in a bank account, Rule 4(4) reiterates that such assets held abroad are to be deposited in the foreign bank accounts of the declarants and held in these accounts till 30th June 2019. It is not understandable how this condition will be fulfilled.
The ordinance did not give the declarants any option to revise or amend their declarations filed under the scheme. In the draft rules this option is being provided under Rule 7; however, the validity of this facility through the rules is again questionable.
Rule 5 which deals with the payment of already imposed tax without payment of default surcharge and penalty shows that a person availing himself/herself of this facility will have to pay the amount of tax determined by the 'Officer of Inland Revenue' even in cases where as a result of an appeal filed by the taxpayer the amount of tax demand was reduced by the Commissioner Appeals.
This is due to the fact that Commissioner Appeals is not included in the definition of 'Officer of Inland Revenue provided in the Income Tax Ordinance and referred in the above mentioned rule.
The experts have termed this rule harsh, as the taxpayer is being asked to deposit a tax demand which does not even exist after the appellate order.