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‘Tax amnesty scope broadened to benefit masses’

Business

May 18, 2019

KARACHI: The government has expanded the scope of new tax amnesty scheme for declaration of undisclosed foreign and domestic assets, a chartered accountants firm said on Friday.

The federal cabinet presided over by the Prime Minister Imran Khan earlier this week approved a new tax amnesty scheme for undisclosed domestic and foreign assets and it was promulgated through the presidential ordinance.

AF Ferguson & Co., a member firm of the PricewaterhouseCoopers network, said any individual could make declaration of undisclosed assets, expenditures, sales and benami assets under the latest money whitening scheme.

While the previous tax amnesty scheme allowed only Pakistani citizens to file the declarations the latest law does not make any such restriction, the chartered accountants firm said.

The government promulgated the Assets Declaration Ordinance 2019 on May 14, “which is a step in the right direction, necessitated by the prevailing circumstances of the economy and tax culture of Pakistan where not only a sizeable part of assets is undeclared/under-declared, but is also held in the form of benami assets,” AF Ferguson, which is also the partner firm of the Federal Board of Revenue (FBR) Chairman Shabbar Zaidi.

The company said Benami Transactions (Prohibition) Act 2017 has become operational this year owing to the issuance of relevant rules whereby holding of benami assets is declared as illegal. “It was, therefore, imperative to bring a transitional declaration mechanism for providing an opportunity to bring these assets into the documented economy.”

Application of the automatic exchange of information under the common reporting standard of the Organisation for Economic Cooperation and Development has already resulted in availability of substantial information with the FBR about foreign assets of Pakistanis.

“The information has the potential of being used for the identification of assets / expenditures currently out of the documented system,” AF Ferguson said.

Under these circumstances, it is a requisite gesture on part of the federal government to provide an opportunity for declaration of such assets / expenditures before any significant prosecution drive is undertaken.

Moreover, there are various tax disputes where the amounts are outstanding due to the pendency of the cases in courts of law. The ordinance also caters for the payment of such demands without any penal consequences, subject to certain restrictions.

The Assets Declaration Ordinance 2019 is different in certain aspects from the previous scheme due to the above changes of circumstances, the chartered accountants firm said. There are certain matters where necessary clarification will be issued in due course.

It is also expected that the issuance of the ordinance by the federal government will be followed by announcement of amnesties by the provincial governments to encourage declaration of services revenue not yet declared and to allow payment of related services tax.

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