ISLAMABAD: Just eight days before the time limit the ongoing Tax Amnesty Scheme, the Federal Board of Revenue (FBR), urged the people to benefit out of the scheme or get ready for action because FBR had collected the data of almost all the potential taxpayers through mapping of business plazas and other properties.
Moreover, in the changing international economic scenario it is almost impossible to maintain undeclared assets or bank accounts abroad because FBR will be legally empowered to have access to both the domestic and foreign currency bank accounts from the July 01, 2018.
Addressing a press conference here on the ongoing Tax Amnesty Scheme FBR Official Spokesperson & Member Policy Dr. Muhammad Iqbal said that due to OECD initiatives for promoting transparency and exchange of information on tax matters, offshore tax evasion and avoidance is higher likelihood of coming to the notice of tax administration.
“Pakistan is signatory to the Organisation for Economic Co-operation and Development (OECD) Convention on Mutual Administrative Assistance in Tax Matters which has been signed by most of the countries around the globe. Pakistan is poised to receive information in the latter half of 2018 in respect of offshore financial accounts” he maintained.
The said information of bank accounts maintained by Pakistanis abroad shall be provided by those jurisdictions automatically, he said that against this backdrop, amnesty on foreign assets was an opportunity for Pakistanis to declare undisclosed foreign assets at very low rates without incurring any penalties.
Time limitation to probe sources of foreign assets, investments and expenditures has been removed through Finance Act, 2018. As a result of this amendment, any foreign asset discovered in any year will be liable to be taxed.
He further added that immunity from probe in respect of foreign remittances had been limited to Rs10 million per year through Finance Act, 2018. Any amount received beyond this threshold would be liable to be probed and taxed.
Through Finance Act, 2018, filing of foreign income and asset statement has been made mandatory and failure to file or disclose foreign assets in the statement shall be liable to penalty of 2% of the value of the assets or income for each year of default.
Law of controlled foreign companies has been introduced, he said, through Finance Act, 2018, and any income from investment in foreign entities has been made taxable. Therefore, any investment and income there from not disclosed shall be taxed.
Responding to a question, he was optimistic about positive results of the scheme with observation that scheme had been prepared keeping the best international practices in view. Moreover the different tax rates for the declaration of domestic and foreign assets were also fixed while going through amnesty schemes introduced by some other countries.
Dr. Iqbal also hoped about huge response to the scheme from the people saying that people had started taking keen interest in the scheme from the day first; however, were reluctant in benefitting out of it just due to our social behavioral trend as people tended to wait for last dates for the depositing of utility bills.
To another question, he said that people had been restricted from depositing tax in foreign currency otherwise people could have purchased dollars from local market and then deposited as tax for declaring their undeclared assets; it could have higher the currency rate by several times.