ISLAMABAD: The Federal Board of Revenue (FBR) has prepared a draft of amnesty scheme titled ‘Foreign Assets Declaration Scheme’ (FADS) and handed over to Prime Minister Shahid Khaqan Abbasi, proposing tax rates of 3 to 5 percent for bringing back offshore assets into Pakistan exactly on the pattern of Indonesian model.
Tax authorities have also prepared another comprehensive plan for payment of all pending tax refunds worth billions of rupees before expiry of tenure of the incumbent PML-N led regime as all those stuck up amounts by the FBR will be cleared where Refund Payment Orders (RPOs) were issued.
Top officials in PM Secretariat confirmed to The News on Wednesday the draft of FADS was now in possession of Prime Minister Shahid Khaqan Abbasi in which the FBR proposed adoption of Indonesian model by fixing lower taxation rates in the range of 3 to 5 percent for regularising of assets but the beneficiaries of this upcoming scheme would have to declare worth of its assets in any foreign currency and then equivalent amount in rupees would be paid for tax payment purposes.
“If this proposed scheme ensures confidentiality of those availing this scheme and also grants protections from NAB and Anti-Money Laundering (AML) laws, Pakistan can get $2 to $4 billion on immediate basis,” official sources confirmed to The News here on Wednesday.
By offering lower rates for its amnesty, Indonesia had attracted $30-$40 billion back into its economy.
In the aftermath of surfacing PanamaLeaks, different countries had unveiled amnesty schemes for regularising foreign assets of their nationals. Pakistan decided to adopt Indonesian model under which the tax rate was proposed at 3 to 5 percent for declaring their assets.
The government rejected proposal to offer this upcoming amnesty for on shore assets so only owners of offshore companies and assets will be able to avail this scheme.
The government has not yet decided that how it will be implemented. There are two options one is getting approval from the Parliament which seems impossible because the ruling party does not enjoy majority to pass it from Parliament. The second option is promulgation of an ordinance and then pass it from Parliament by making it part of money bill in next budget.
The Prime Minister Shahid Khaqan Abbasi is set to take up FADS probably on coming Monday or he will chair meeting after his return from Davos after attending World Economic Forum (WEF).
When contacted, Chairman Tax Reforms Commission Masood Naqvi told The News on Wednesday that there were eleven countries including Germany, US, Canada, Indonesia and even India had given amnesty scheme for bringing back their foreign assets into their countries so the stage was ripe to go ahead with this scheme by evolving consensus. He said that India had slapped higher tax rate in the range of 35 percent and could not able to bring back more than $10 billion.
“If confidentiality of beneficiaries of this scheme is ensured and grants protections from some laws, Pakistan could bring back $5 to $10 billion,” he made projection and added that the deliberations with FBR were expected today (Thursday) and then final meeting would be held with prime minister anytime afterwards to finalise this proposed scheme.
Dr Ishrat Hussain, former governor State Bank of Pakistan said that Pakistan should introduce one time amnesty just on the pattern of Indonesia as they were able to bring back $30-$40 billion into their country.
