Govt to announce amnesty for undeclared foreign assets ahead of OECD’s treaty

KARACHI: Government on Saturday said it may roll out an amnesty to allow offshore bank account holders to declare their wealth against nominal tax rates ahead of the implementation of OECD’s treaty to exchange financial details with foreign countries in September.

Miftah Ismail, adviser to the Prime Minister for finance, revenue, and economic affairs said the scheme will give a chance to Pakistanis to declare money parked in foreign banks prior to formal initiation of exchange of information under the Organisation for Economic Cooperation and Development’s (OECD) convention.

“The government is planning to introduce an amnesty to Pakistanis having undeclared foreign assets before the launch of exchange of information under the international treaty,” Ismail said at a meeting with the office bearers of Association of Builders and Developers of Pakistan (ABAD).

In September 2016, Pakistan had signed a multilateral convention of mutual administrative assistance in tax matters of OECD to nab tax evasion and net looted money.

The Federal Board of Revenue (FBR) has already activated units for exchange of information from January 1. However, the formal exchange of information with foreign banks will take place from September.

Ismail said the amnesty scheme will protect declared assets against money laundering and other laws for fiscal crimes.

The PM adviser said OECD is a powerful international tool to obtain financial information, but the government wants to give an opportunity to business community to bring back money and invest it in homeland for industrial growth.

The adviser further said the government is going to reduce personal income tax, but he ruled out a reduction in corporate tax rates.

“The tax rates on individuals will be cut from this year,” he added.

Ismail said the country is facing fiscal pressures ahead of general elections but “We are trying to curtail budget deficit to 5 percent for the current fiscal year”.

The finance ministry’s official expects GDP growth at six percent for the current fiscal year of 2017/18.

He further said the developed economies attained nine to 10 percent GDP growth and brought prosperity. “The government eyes this growth rate.”

Ismail said the government will settle all rebates and refunds by the mid of next month on the directives of ex-prime minister Nawaz Sharif.

On property valuation, he said the existing table encourages black money and people to hide actual price of property.

“We will formulate a policy to ensure true declaration,” he added.

The PM adviser further said the schemes will also be announced to bring benami (anonymous) assets into the documented economy.

The adviser assured the ABAD members that the government gave no preference in tax exemption and concession to projects under China-Pakistan Economic Corridor.

Business magnate Arif Habib said developers and builders want documentation on ‘real’ prices, but buyers had difficulties in declaring wealth.

Habib proposed that property buying of up to Rs15 million should be exempted from a mandatory requirement of wealth statement.

“Housing finance could not be improved in the country due to lack of documentation,” chief executive of Arif Habib Corp, which manages real estate investment trust, added.

Habib said the lower tax rate and incentives on declaration will improve housing loans.

The industry official said real estate investment trust was introduced to encourage small investors.

“The scheme was granted certain tax breaks but in the following years the FBR withdrew all the concessions and the scheme had become redundant,” he added.