Pakistan mulls tax amnesty

ISLAMABAD: Pakistan is mulling a tax amnesty to bring back wealth hidden in foreign assets, a move that may boost stocks, bonds and property, reports foreign media.

The government is considering submissions by Pakistan’s business community seeking relief on undeclared offshore holdings, said Syed Masoud Ali Naqvi, a member of the government’s Tax Reformers Implementation and Monitoring Committee. No plan has yet been approved or finalized, he said.

The proposal, if implemented, could help boost revenue and offset the risk of fiscal slippage before next year’s national elections, Hasnain Malik, a Dubai-based analyst with a frontier-market investment boutique, wrote in a research note last week.

It may also offer respite for Pakistani equities, which have trailed the MSCI Frontier Emerging Markets Index this year after being Asia’s best performers in 2016.“Liquidity in the stock market and real estate should increase significantly, even based on conservative forecasts,” Shiraz Zaidi, research head at a Karachi-based brokerage, said by phone.

“The fact that other countries have implemented a tax amnesty makes this legislation more likely.”   Pakistan could collect about $3.5 billion in tax revenue, equivalent to 1 percent of nominal gross domestic product, if 30 percent of the undeclared foreign assets are disclosed and an average 8.5 percent tax is levied, Exotix said, citing Argentina’s recent success.