Amnesty gets tepid response after deadline extension on post-poll risks

KARACHI: Government received a lukewarm response to the tax amnesty announced for concealed local and foreign assets after an extension in its deadline last month as people are wary of the next government’s reaction to the scheme following the elections scheduled next week.

“We were receiving a bulk of inquiries during the last 10 days of last month,” Muhammad Zubair, general secretary of Pakistan Tax Bar Association said. “But now it has been reduced to hardly one or two per day.”

Zubair said prospective declarants are waiting for the outcome of the coming elections as major parties have their different viewpoints on the illegal assets.

The previous government of Pakistan Muslim League-Nawaz launched the amnesty scheme in April for three months to bring back undisclosed local and foreign assets in the documented economy.

The deadline of the amnesty scheme was June 30. The caretaker government, however, extended the last date to July 31 following the demand from the stakeholders.

The Federal Board of Revenue (FBR) expressed disappointment over the response after the extension as it received less than 50 declarations under the amnesty schemes till July 16. More than 55,225 declarations of assets/cash worth Rs1.769 trillion were made under both the foreign and domestic amnesty schemes till June 30 and the FBR received almost Rs100 billion in tax payment of two to five percent on disclosed assets.

Zubair said people are mostly habitual to avail any benefit at the eleventh hour.

“Normally, income tax returns, statements and other compliances are made on the last dates,” he said. He hoped that the declaration rate would increase in the coming days.

Tax experts said the changes into the amnesty law – especially related to the explanation on finality of adjudication cases – introduced on July 1 also discouraged people to avail the scheme.

They said slow payment process under the foreign asset declaration scheme is also hurting sentiments of prospective declarants.

“Payments have been cleared and received at the State Bank of Pakistan, yet cash payment receipts (CPRs) are not generated for declaration to the FBR,” Zeeshan Merchant, vice president of Karachi Tax Bar Association (KTBA) said.

Merchant, citing two cases, said payments were processed and received by the central bank on June 24 and July 5, but their CPRs are yet to be generated.

Merchant said economic conditions are discouraging Pakistanis living abroad to repatriate assets.

Tax experts said declarants may have feared freeze of foreign currency accounts due to the prevailing economic conditions as done in May 1998 following adverse economic crisis.

Tax practitioners further said people, who want to avail the scheme, could not do so as they don’t have foreign currency account. Under a law, an individual who has bank account balance till June 20 can alone avail the scheme.

Tax professionals are receiving inquiries from people who had sent money abroad through informal channels and now wish to avail the scheme. Zubair said the government should consider giving such people an access as it would help in generating huge amount as tax and repatriation of bulk foreign exchange into country.