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December 29, 2016

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One-time amnesty for offshore companies in the offing?

One-time amnesty for offshore companies in the offing?

 Companies, bank accounts, real estate, etc, would be whitened on payment of 2-5pc tax

ISLAMABAD: The Senate Standing Committee on Finance has unanimously recommended the government to announce general tax amnesty scheme for all sectors of the national economy exactly on the pattern of the recent one granted to the real estate sector.

The panel also asked the Federal Board of Revenue (FBR) to prepare a proposal for general tax amnesty scheme and present it before the committee.

It is relevant to mention here that barring politicians and bureaucrats, top functionaries in the government are contemplating different options to grant one-time amnesty to all those who owned offshore companies, assets and bank accounts abroad to bring back their assets to Pakistan by paying 2 to 5 percent tax. This scheme might be introduced along with Finance Bill 2017. 

Presided over by Senator Saleem Mandviwalla, the Senate panel held its meeting at the Parliament House on Wednesday in which Secretary Finance Dr Waqar Masood assured the committee that the central bank would issue a circular to all banks for directing them to pay back deposit amount of all those who had contributed as Qarz Hasna for “Qarz Utaro Mulk Swanro” on Feb 23, 1997 for the purpose of retiring debt.

The representatives of the State Bank of Pakistan (SBP) told the committee that the National Debt Retirement Programme (NDRP) was stopped in 1999 and its account was closed down in 2005.

Under this scheme, the government had sought donations, Qarz-e-Hasna and term deposit, the government had received total amount of Rs2.805 billion in the shape of Rs2.032 billion as donations, Rs470.659 million as Qarz-e-Hasna and Rs302.540 million as term deposit out of which the government had retired Rs1.7 billion debt, so now balance was available to the tune of Rs1.105 billion. The secretary finance told the committee that the government would retire the debt with available balance. 

Chairman Senate Standing Committee Saleem Mandviwalla said that there was no mechanism for getting back the money that was contributed as Qarz-e-Hasna. On this issue, the secretary finance made a commitment that the SBP will issue a circular directing all banks to pay back the money to those who had deposited amount under this head.

On the issue of general tax amnesty scheme, Saleem Mandviwalla said that the FBR had always taken the stance that there was no amnesty under consideration for the real estate but finally the bill was approved by the National Assembly.

Rehmatullah Wazir, Member FBR Inland Revenue (Policy) and Dr Iqbal argued before the committee that the Board had opposed this scheme but parliament was sovereign and passed the amnesty scheme for the real estate on the pretext that there was a difference between DC rates and FBR’s notified rates, so on this difference the amnesty was offered to whiten the money at fixed rates.

Mandviwalla asked as to why such an amnesty scheme was offered only to the real estate sector? The FBR’s Member IR Rehmatullah Wazir told the committee that the property’s amnesty scheme could be availed till the next Finance Bill 2017. So far, 1,919 transactions were made by declaring Rs1.4 billion and the paid tax stood at Rs51 million since December 7, 2016. 

Senator Mohsin Aziz of PTI said that there were contradictory laws made by the government as on the one side they introduced the amnesty scheme for real estate while on other hand they were proposing legislation against benami transactions. He said that such amnesty scheme should be provided for productive sectors like industrial sector that will generate employment opportunities.

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