Mian Mansha declared foreign property: Ferguson partner

LAHORE: Najam Sethi said the IMF asked for overcoming the Rs 40 billion deficit in tax collection during the current quarter as the government was to receive the instalment of $510 million from the IMF.
Expressing his views in Geo News programme ‘Aapas ki Baat’, he said the government had set a tax collection target of Rs 3,000 billion for the current fiscal year but not in a position to meet that because of not imposing direct taxes as it lacked political power.
According to Sethi, taxes should be imposed on trade and on those not paying the taxes to expand the tax net. The easiest thing is to tax the imported items although there are international conventions against that, calling for decreasing the tax structure - not that to impose as an emergency. Although the taxes have been imposed on luxury items, the tax collection method is wrong. The government has failed in going for direct taxation and is even being blackmailed by traders over the issue of taxing the bank transactions.
Ishaq Dar is saying that the move targets the affluent only. The items that have taxed are 350 but the prices would go up for 3,000, with the excuse that the government has levied new taxes. It is not the right move but the step has been taken as an emergency measure on the directives of IMF.
On one hand, those not paying the tax are not being included in the tax net and on the other those already paying are harassed to achieve the targets.
During the programme, Sethi talked to Shabbar Zaidi - the partner in world renowned firm Ferguson. He asked Zaidi about the malicious media campaign against Mian Mansha, which says how he did buy a property in London and what the source of money is and how the money was transferred from Pakistan, claiming that it is an illegal exercise. Sethi asked why the campaign had been launched as Mian Mansha paid all the taxes regularly.
In his reply, Zaidi said unfortunately, those in Pakistan who showed assets were questioned but not who hid that. There were thousands of people in the country, he said, with assets abroad and they did declare that, adding that Ishaq Dar openly stated that he had $200 million in foreign countries.
According to Zaidi, Mian Mansha has mentioned a London property in his declaration. He is now being asked about the money transferred and its source. The FBR can verify the property. Showing the property is a great gesture as very few in Pakistan have shared the details of their assets abroad.
There is lot of confusion about transferring money from Pakistan which should be cleared. The law allows every Pakistani to maintain a foreign currency account and he can also own assets in other countries. It means that every Pakistani can maintain a foreign currency account and go into business dealing through it and buy properties abroad. It is an excellent system to accumulate wealth and there is no other alternative in the system.
To prove his point, Zaidi cited the State Bank laws and Foreign Exchange Act, allowing the Pakistani citizens to own assets abroad, but which should be declared.
When asked whether the State Bank’s permission is required to buy a property worth millions of dollars, Zaidi said there was no need of that. Explaining his argument, he said there were two types of investment in Pakistan.
According to Zaidi, in the first type, one asks the State Bank to allow conversion of rupees into dollars and seeks the permission to invest abroad. Secondly, you can maintain a foreign currency account in Pakistan and also feed it. An account holder can instruct his bank that he is buying this property and, therefore, remit the required money, while giving a receipt to the bank. But the condition is that the said asset is mentioned in the wealth statement.
At this point, Sethi said one could buy a property in another country after a legal transfer of funds, but the source of money had to be declared there for the buying purposes.
According to Sethi, one can show, in this way, the source of money Pakistan and its trail through the bank transactions. Hence, it is white money and doesn’t involve money laundering. Once the property is purchased, it starts generating income on which tax is paid in that country being a registered taxpayer. And once tax is paid there, he is not to pay the same back home, as law says income tax is not paid twice. Sethi said whether the tax is paid at one place and there is no double taxation - a point seconded by Zaidi.
While explaining his point, Sethi said it meant that levelling allegations against Mian Mansha was unfair, adding that no one could match Mian Mansha and his family in paying taxes.
While agreeing with Sethi’s point of view, Zaidi said the Western countries did not accept the funds that were not transferred through a reliable account. They accepted the transactions only through Pakistan’s foreign currency accounts, he added. Sethi said the people involved in levelling baseless allegations against Mian Mansha could be sued, to which Zaidi agreed and stated that declaring assets in the wealth statement was the best option.
Sethi said harassing the people like Mian Mansha was a clear injustice, as he was a big businessman and ran an efficient bank. How a businessman could invest in a country where he was not respected, he remarked.