(April 8, 2019)
President Pakistan Businessmen and Intellectuals Forum (PBIF), President All Karachi Industrial Alliance (AKIA), Senior Vice Chairman of the Businessmen Panel of FPCCI and former provincial minister, Mian Zahid Hussain on Monday said that there are clear possibilities of increasing tax net and white economy of the country by the PTI government’s proclaimed Tax-Amnesty scheme. Ten times Government of Pakistan has offered such amnesty schemes since 1958, which is the highest number of amnesties offered by any government in the world; however these schemes have never yielded any fruitful results. Previous government collected Rs.121 billion for the treasury and added only about 80,000 people to the tax net as a result of Tax amnesty scheme provided in April 2018
The Veteran Business Leader told the business community that in the past PTI has always antagonised such schemes but now when the national revenue collection is falling short by Rs. 370 billions and also in order to increase the formal economy of the country the proposed tax amnesty scheme is quite welcome. Moreover the amnesty scheme will contribute towards Tax to GDP ratio of Pakistan which is only at 11% right now, whereas China and India is at 17% and 20% respectively. Indeed it will be helpful to the people who wish to pay their taxes but too afraid to declare their assets until now. According to the FBR this scheme will accumulate about Rs. 300-400 billions, however achieving this target will be hard, if not impossible when equated with past results of such amnesties. Now it’s vital for all non tax payers to benefit through this scheme and play their part in the economic development of Pakistan. People who will not declare their assets until July 2019 will be penalized to pay 300% fine and could face imprisonment for up to 5 years. As per Income Tax laws the government has planned a crackdown in July 2019 over the people who wouldn’t declare their assets under this amnesty scheme. This scheme will be the last chance to legitimise their offshore and onshore assets in order to save their selves from imprisonment and heavy fine afterwards.
The Former Minister said that Government will share the scheme with IMF after cabinet’s approval under Presidential ordinance because IMF can oppose the amnesty program like before. FATF clearance is also needed which is currently reviewing Pakistan’s status over money laundering and financing for terrorism. This move coincides with the implementation of the Benami Act in March 2019 in line with its efforts to document the economy. Minister Finance Asad Umar is very hopeful for the success of amnesty scheme and perceives it as a big step towards the broadening of the tax net. 1.8 million People have filed their tax returns until now whereas there is a target set for increasing the tax net with 5 million tax payers. Under the proposed scheme, the government will offer three slabs for declaring all kinds of assets, both offshore and onshore. The proposed slabs were 5pc, 7.5pc and 10pc for whitening of the assets.
Mian Zahid Hussain said that FBR laws doesn’t accommodate small scale businesses due to which most of the small scale businessmen are hesitant to become part of the tax net. There should be a fresh taxation authority to devise laws in accordance with the market’s requirement so that the revenue through taxes for the government could be raised by 100%.