Amnesty Scheme: Last chance to bring foreign assets back: FBR chairman

KARACHI: Federal Board of Revenue (FBR) Chairman Tariq Mehmood Pasha while highlighting the problems likely to be faced if anyone chooses not to bring back foreign assets under Amnesty Scheme stated that countries around the world had devised new legislation and were strictly monitoring and investigating foreign funds which would ultimately be pinpointed and confiscated abroad even before the FBR identifies such funds. Speaking at a meeting during his visit to Karachi Chamber of Commerce Industry (KCCI), FBR chairman stated that it was the final chance to bring back those assets to Pakistan which would otherwise be confiscated abroad if the possessor could not explain.

The FBR chairman said confidentiality is a must in the Amnesty Scheme laws. This scheme is not for funds obtained through corruption and not for crime proceeds but is only for those businessmen who transferred funds abroad from their own businesses without paying taxes.

He admitted that the system was weak and marred with loopholes in the past which paved way for easily transferring funds abroad. He urged the business community to bring back funds to their own country by paying a meager tax of just 2 to 5 percent.

In response to a suggestion pertaining to further relaxing the procedure for remitting funds, FBR chairman said that international anti-money laundering laws and Financial Action Task Force (FATF) regime refrain them from further relaxing this scheme which is the basic reason it is mandatory to declare foreign funds and send the applicable tax on these funds either from personal account or from sister’s, brother’s, wife’s, son’s, daughter’s or parents’ accounts. He said that there were some hindrances in way of Amnesty Scheme which were taken care of that resulted in proper take off of this scheme. Two schemes were announced by the government and it was a matter of pride that after Eidul Fitr a huge take off has been witnessed in both which clearly indicates that these schemes have been warmly welcomed, he added.

FBR chairman further stated Pakistan has become a member of Multilateral Convention Agreement among 102 countries enabling them to gain access to information of those Pakistanis who have bank accounts abroad with effect from September 1 2018. He further said FBR and another government department are currently working on a list of Pakistani individuals having properties in Dubai and many of these individuals are being questioned. Previously FBR had no access to such details but now this information was being shared with us by the authorities in Dubai. As a test case around 100 cases of such properties were sent to Dubai of which FBR has received details about 55 cases including their names, addresses, size and worth of properties which have been verified by the taxation authority in Dubai. “Hence the FBR doesn’t require further evidence as the details sent by a foreign government department is an admissible evidence in the court of law,” he added.

Tariq Pasha further commented that changes have also been introduced in the Withholding Tax Regime as initially the banks were not sharing information with FBR but now a threshold about deduction of Withholding Tax has been agreed upon hence the information is being shared with the FBR in case an accountholder exceeds the withholding tax limit. Furthermore if remittances of more than 100,000 dollars per annum arrive in any bank account in Pakistan, the recipient will be asked about the source of such remittances, he added. He further informed that FBR has also obtained details of local investments in new real estate projects and it was found that many individuals have massively booked properties in such projects. While examining such cases an individual was found who booked 20 apartments worth Rs40 million each, he noted.

When asked who has access to FBR’s portal containing confidential information of taxpayers under Amnesty Scheme, FBR chairman said that only FBR Member Inland Revenue Policy Dr Muhammad Iqbal currently has access to this confidential data which would also be shared at lower level with Commissioners at a later stage.

In response deep concerns were expressed by KCCI representatives who feared that such confidential data will be misused to harass taxpayers therefore nobody should be given access to such data. However it was assured that strictest action including one-year imprisonment and a fine of Rs1 million or both will be imposed on any government servant found guilty of misusing confidential data. KCCI representatives were of the opinion that as the existing taxpayers are further squeezed all the time to achieve revenue targets the same may also happen with those taxpayers who avail themselves of the Amnesty Scheme therefore there is a dire need to clarify the confidentiality of taxpayers’ details in Amnesty Scheme.

Siraj Kassam Teli in his remarks pointed out that the Amnesty Scheme had suffered a lot of delays due to political issues but it was ultimately launched by PML-N government just before its departure.

Later on the Supreme Court also took suo motto notice of the scheme which triggered uncertainty amongst individuals who remained dubious about the fate of Amnesty Scheme. It was being expected that this scheme may go through some changes or the Supreme Court may completely deny it however go ahead was given to it but the court’s decision has not been issued in writing so far, he noted adding that because of all these issues a lot of time has been wasted and now with hardly 5 days left, the demand to extend this scheme seems fair enough. He stressed that the government and State Bank of Pakistan must take the demand for extending Amnesty Scheme into consideration as now is the right time as people fully understand this scheme and it has picked up some pace.

Siraj Teli stressed that Pakistan needs these funds being remitted through Amnesty Scheme as the country’s foreign exchange reserves were rapidly depleting and the need for once again approaching the IMF for assistance was being felt. If Amnesty Scheme is resulting in gathering the desperately needed funds, there is no harm in extending it for a period of at least 15 days or a month in the larger interest of the country, he added.

He further advised FBR chairman to devise some kind of a mechanism or an effective strategy to discourage wrongdoing by people. “The current taxation mechanism is marred with flaws which keeps many people away from tax net. If these flaws are wisely addressed, I don’t think any individual would hesitate in paying his taxes or hide funds abroad,” he added and urged the FBR to refrain from carrying out unnecessary interrogation and questioning which triggers the element of fear amongst the masses who prefer to stay away from FBR. “If it actually happens, a lot of funds would automatically pour into Pakistan,” he said.