Tax amnesty scheme proposed to bring money home

ISLAMABAD: The Federal Board of Revenue (FBR) has prepared a draft of proposed tax amnesty scheme for bringing back/regularising foreign assets of Pakistanis abroad with minimum tax rate of 3 to 5 percent providing legal protection to be given from the National Accountability Bureau (NAB), Anti Money Laundering (AML) laws and reversal of any such scheme.

“If constitutional guarantee is made part of any such scheme whereby all those will be given protection from not asking questions from the NAB, AML laws and confidentiality of those declaring assets, Pakistan could get $4 to $6 billion from this one time amnesty scheme,” top official sources confirmed to The News here Friday.

The incumbent regime of PML-N has been facing a dilemma that how such an amnesty scheme could be made sellable at the end of the tenure of the government. The constitutional guarantee with the approval of the Parliament seems difficult preposition because the government lacks majority in the Senate.

The sources said that the draft policy prepared by Tax Implementation Reform Commission (TIRC) led by Masood Naqvi played key role in preparation of draft of this amnesty scheme under which two different tax rates were proposed who would bring back their assets after disposing of and their tax rates would be minimal in the range of 2 to 3 percent. But the tax rate proposed on higher side for those who would declare their assets before the tax authorities here in Pakistan and their rates would be higher over 5 percent.

The draft of proposed scheme, the sources said, has been shared with Prime Minister Shahid Khaqan Abbasi and fine tuning of the scheme is required for which the premier is expected to convene another important meeting in first half of January 2018.

The tax authorities believe that the global environment especially in the aftermath of joining OECD forum by Pakistan paved the way for introducing such an amnesty scheme because there was increasing demand from the business community to provide an opportunity for regularising foreign assets abroad.

In the aftermath of PanamaLeaks, the names of owners of offshore companies surfaced. Then Pakistan ratified OECD forum and this mechanism would become operational next year. Although, all amnesty schemes in Pakistan had failed to get the desired results and international financial institutions (IFIs) such as the IMF and World Bank also opposed amnesty scheme because it discourages honest taxpayers, the tax authorities argued that any such scheme might become successful this time keeping in view global environment against tax evaders and money launderers and secondly if Pakistan placed certain pre-requisites into the upcoming scheme then the chances will improve that the country might get attraction of owners of foreign assets where they might prefer to regularise $4 to $6 billion assets lying abroad in different parts of the world.

The official said the FBR did not possess any exact data about monetary size of assets and properties owned by Pakistanis abroad. “It could be guess work but conservative estimates suggest that if Pakistan announces right kind of incentives then we could attract anything ranging from $2 to $6 billion in few months period,” said the official. The one option, available to the government, is introduction of such scheme through presidential ordinance, but it will not attract much interest of owners of foreign assets.