FAISALABAD: The Federal Board of Revenue (FBR) has prepared a draft for amnesty scheme titled the Foreign Assets Declaration Scheme (FADS) and handed it over to Prime Minister Shahid Khaqan Abbasi proposing a tax rate of three to five percent for bringing back offshore assets to Pakistan exactly on the pattern of Indonesian model.
The tax authorities have also prepared another comprehensive plan for payment of all the pending tax refunds worth billions of rupees before expiry of tenure of the incumbent PML-N led regime as all those stuck amounts with the FBR will be cleared where the Refund Payment Orders (RPOs) were issued.
Top officials at the PM Secretariat confirmed to the media on Wednesday that the draft of FADS was now on the table of Prime Minister Shahid Khaqan Abbasi in which FBR proposed adoption of Indonesian model by fixing lower taxation rate in the range of said percentage for regularizing assets but the beneficiaries of this upcoming scheme would have to declare the worth of assets in any foreign currency and then equivalent amount in rupees would be paid for tax payment purposes. If this proposed scheme ensures confidentiality of those availing this scheme and also grants protection from the NAB and Anti-Money Laundering (AML) laws then Pakistan can get $2 to $4billion on immediate basis. By offering lower rate for its amnesty, Indonesia had attracted $30-$40billion back into its economy.
In the aftermath of surfacing of the PanamaLeaks, different countries have unveiled amnesty schemes for regularizing foreign assets of their nationals. The government rejected the proposal to offer this upcoming amnesty for onshore assets, so only owners of offshore companies and assets will be able to avail this scheme. The government has not yet decided how it will be implemented. There are two options; one is getting approval from parliament which seems impossible because the ruling party does not enjoy majority to pass it from parliament. The second option is promulgation of an ordinance and then passing it from parliament by making it part of the money bill in the next budget.
Prime Minister Shahid Khaqan Abbasi is set to take up FADS probably on coming Monday or he will chair a meeting after his return from Davos after attending the World Economic Forum conference (WEF).
When contacted, Chairman Tax Reforms Commission Masood Naqvi told the media on Wednesday that there were 11 countries, including Germany, US, Canada, Indonesia and even India, who had been given amnesty for bringing back their foreign assets into their countries so the stage is ripe to go ahead with this scheme by evolving a consensus. He said India has slapped higher tax rate in the range of 35 percent and could not bring back more than $10billion.
If confidentiality of beneficiaries of this scheme is ensured and protection from some laws is granted, Pakistan could bring back $5 to $10billion.
Dr Ishrat Hussain, former Governor State Bank of Pakistan, said Pakistan should introduce one time amnesty just on the pattern of Indonesia as it was able to bring back $30-$40billion into their country.