Shehbaz to pay Rs1.47m on foreign assets

ISLAMABAD: The Shehbaz government has announced one percent Capital Value Tax on assets or capital exceeding Rs100 million, held abroad by a resident of the country.

Interestingly, the tax will be applicable to Prime Minister Shehbaz Sharif himself along with several other Members of the National Assembly. Shehbaz will have to pay Rs1.47 million for his declared assets abroad having worth of over Rs147m. In the National Assembly, the highest payer of CVT on assets held abroad will be Bilawal Bhutto Zardari, who will pay Rs14.36 million for his assets and capital abroad worth over Rs1,436 million.

The Pakistan Peoples Party chairman is also a shareholder of two villas in Dubai and has numerous investments and shares in a number of companies, all in Dubai. Bilawal has declared a total of Rs1,436 million movable assets, all in Dubai, apart from the two villas.

Prime Minister Shehbaz Sharif declared assets worth Rs147 million abroad, including two apartments and a foreign bank account. MNAs are bound to disclose all assets and liabilities in Pakistan as well as abroad to the Election Commission of Pakistan, which is notified annually in the ECP’s Gazette Report of Assets and Liabilities. They themselves declare assets and liabilities and also mention their value in terms of money.

An announcement ofCapital Value Tax on assets held abroad was mentioned in the latest budget report for year 2022-2023. The budget recently announced by the government states, "Capital Value Tax shall be charged on assets of a resident individual, whether movable or immovable, held abroad where the value of such assets exceed rupees hundred million".

The value of the assets, according to the budget report, will be determined higher than the total consideration paid to acquire, alter or improve the asset or the fair market value of the asset held abroad. The value shall also be specified by the federal government in case when the assets are identified by the authority.

Whereas the person holding the assets or capital worthy more than Rs100 million abroad will be liable to pay one percent tax at the time of filing of income tax returns every year. If any person fails to pay the tax, not only they will have to pay the exact amount of money owed to the public exchequer, but also pay 12 percent more defined as “default surcharge”. This fine will be imposed every year in which CVT for assets abroad is not paid. Where this 12pc default surcharge will also be applicable to the tax collector if he/she fails to collect.