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President signs ordinance for tax amnesty scheme

President signs ordinance for tax amnesty scheme

ISLAMABAD: President Mamnoon Hussain has approved an ordinance bringing into effect a tax amnesty scheme announced by the government last week.

The president promulgated four ordinances to give effect to tax amnesty scheme for whitening of local and offshore hidden assets, while for beneficiaries the government has not announced immunity from prosecution under anti-corruption, anti-money laundering and counterterrorism financing laws.

The government also did not lower the income tax rates for the Association of Persons, which would still pay maximum 35% rates. However, individuals’ income tax rates have been cut with effect from July, who will now pay highest rate of 15% plus a fixed tax for the two highest income slabs.

The Financial Action Task Force’s objections to the amnesty scheme also forced the government to withhold the decision to give immunity from prosecution under National Accountability Ordinance, Federal Investigation Agency Act, Election Commission of Pakistan Act, Anti-Money Laundering Act, Anti-Terrorism Act and Anti-Smuggling Act.

The president promulgated Foreign Assets Declaration and Repatriation Ordinance 2018, Pakistan Economic Reforms Protection Act Amendment Ordinance 2018, the Voluntary Declaration of Domestic Assets Ordinance 2018 and Income Tax Amendment Ordinance 2018.

These ordinances will take effect from April 10 and the window to avail the schemes will close on June 30 this year.

About ordinances, Adviser to Prime Minister on Finance Dr Miftah Ismail said that all the four ordinances will have overriding effects on all the existing laws but the proceeds of the crimes cannot be legalised under these pieces of legislation.

The government barred only those politicians, who have held a public office since January 2000, from availing the scheme. The judges of the courts have also been barred from taking benefit.

All citizens of Pakistan, including non-resident Pakistanis, wherever they may be, except holders of public office, their spouses and dependent children can avail the schemes.

Those who have declared their foreign assets would have to pay 3% tax; whereas, for domestic assets 5% tax would be charged.

Prime Minister Shahid Khaqan Abbasi unveiled a five-point tax reforms package on Thursday, which included a tax amnesty scheme for undeclared foreign and domestic assets, and reduction in income tax rates.

The prime minister launched the amnesty scheme and reforms package in what seems to be a last-ditch attempt at broadening the government’s revenue base, merely 55 days before the end of the government’s tenure.

Tax evasion is rampant in Pakistan, where only 1 percent of the adult population pays tax.

Announcing that all 120 million national identity card holders would be assigned tax numbers, Abbasi told a news conference in Islamabad: “If you don’t pay taxes, Pakistan will not be sustainable.”

He said that politically exposed persons (PEPs) and their families were not eligible to benefit from the scheme – valid till June 30.

“Under the amnesty plan, all Pakistanis will be able to declare their unreported income and assets and bring their money into the tax base after paying a 5 percent one-off penalty,” Abbasi said.

On Saturday, Adviser to Prime Minister on Finance Miftah Ismail assuaged the concerns of the Financial Action Task Force (FATF) and assured the tax amnesty scheme did not violate money laundering laws.

“Pakistan’s tax amnesty scheme adheres to all international anti-money laundering laws,” the adviser on finance had said.

Ismail said that he had received an e-mail from the global money-laundering watchdog, FATF, calling for global needs and the agreed-upon guidelines to be respected. Ismail said he had not responded to the email as yet.