- Identities of those declaring local and offshore assets will remain confidential under the new law
- The scheme has been opposed by various parties, calling it against the honest taxpayers
KARACHI: Fearing stiff resistance in parliament, the Government of Pakistan has given legal shelter to the recently announced tax amnesty scheme through the presidential order, paving way for those hiding assets to declare.
The president of Pakistan Mamnoon Hussain on Sunday signed four ordinances including “Foreign Assets (Declaration and Repatriation) Ordinance 2018” into law, giving legal cover to the Economic Reforms Package (ERP).
Other ordinances are Voluntary Declaration of Domestic Assets Ordinance 2018, Income Tax (Amendment) Ordinance 2018, and Economic Reforms (amendment) Ordinance 2018.
With the promulgation of president ordinances, the names and identities of those availing the scheme by declaring local and offshore assets would remain confidential.
Prime Minister Shahid Khaqan Abbasi had announced a five-point tax reforms package on Thursday, which included a tax amnesty scheme for undeclared foreign and domestic assets, and reduction in individual income tax rates.
The purpose of the government’s incentive package is to boost the country’s declining foreign exchange reserves and increase the number of income taxpayers, which stands at 1.2 million at present.
The ordinance would now enforce the five-point tax reforms package and the tax amnesty scheme for undeclared foreign and domestic assets.
According to the ordinance, the officials appointed by the government for the implementation of the ordinance would be empowered. The provisions of the ordinance shall apply to all citizens of Pakistan wherever they may be, except holders of public office including politicians, their spouses and dependent children.
The foreign assets declared and repatriated into Pakistan within a given time will be brought under the tax net by paying 5 percent, while those holding assets abroad will be able to declare by paying 2 percent charges.
The prime minister had announced that the government will monitor the financial records of citizens and issue notices if it finds tax evasion.
Abbasi announced that all 120 million national identity card holders would be assigned tax numbers.
Pakistan is facing measures from the Financial Action Task Force (FATF) and the country is scheduled to be gray-listed in June this year. In an email to the government of Pakistan, the FATF has expressed its concerns over the whitening of assets by violation of anti-money laundering laws. However, Pakistan has assured that tax amnesty scheme does not violate money laundering laws.
“Pakistan’s tax amnesty scheme adheres to all international anti-money laundering laws,” said Miftah Ismail, the adviser to prime minister on finance who received the email said, according to local Geo TV.
Ismail shared that he has received an email from the global money-laundering watchdog, FATF, calling for global needs and the agreed-upon guidelines to be respected.
“The FATF has stressed upon strict monitoring of money laundering and terrorist financing activities,” the Pakistani premier’s financial adviser said.
Many political parties had voiced against the tax amnesty scheme, calling it against the honest taxpayers. The government, fearing furious opposition, has decided to implement the scheme through the presidential ordinance.
“The tenure of presidential order ends after 90 days, which means the government will have to go through the parliament to get it approved,” senior lawyer and former president of the Income Tax Bar Association, Abdul Qadir Memon, told Arab News.