People await budget to declare assets under amnesty scheme: KTBA

KARACHI: People are awaiting budget announcement for the next fiscal year of 2018/19 to declare their local and foreign assets and benefit from the new amnesty scheme, a senior tax practitioner said on Wednesday.

Khalid Mahmood, president of the Karachi Tax Bar Association (KTBA) said bar members are receiving a barrage of queries about the tax amnesty scheme.

“But people are reluctant to document their undeclared money and assets before announcement of the budget,” he told reporters.

Early this month, government announced tax amnesty scheme through presidential ordinances, which would expire till June, to give residents one-off tax benefits for repatriating undeclared local liquid assets with a five percent penalty, undeclared foreign liquid assets with a two percent penalty (if repatriated, or a five percent penalty if remaining abroad or in foreign currencies), and undeclared fixed assets – whether held locally or abroad – with a three percent penalty.

Tax practitioners agreed that the tax benefits are likely to get overwhelming response from people holding undeclared assets after the announcement of budget 2018/19 scheduled for April 27.

Vice President Zeeshan Merchant, General Secretary Syed Zafar Ahmed and other office bearers of KTBA were also present on the occasion.

Mahmood said the amnesty is simplest as compared to the schemes introduced in the past. KTBA would issue its official statement on the amnesty at a seminar that would be held on April 23. The seminar will be organised in collaboration with Pakistan Tax Bar Association.

KTBA office bearers said the amnesty scheme would improve Pakistan’s balance of payment situation.

They said undeclared money and assets would not find hole-ups anywhere in the world as Pakistan has become signatory to the multilateral convention on mutual administrative assistance in tax matters of the Organisation for Economic Cooperation and Development signed by more than 100 countries for exchange of financial information.

Merchant said there is an anomaly in tax slabs for business individuals. Salaried class would take most of the benefits with revision of slabs effective from July 1, 2018, he added, referring to tax exemption for salaried class with annual income of less than Rs1.2 million.

KTBA’s Vice President said the amendment related to Protection of Economic Reform Act 1992 was a long-standing demand of the bar and other business associations.

Local cash transfers to foreign currency accounts have been linked with active taxpayers list.

However, foreign inflows to foreign currency account still don’t need filing of returns by the accountholders.

Merchant said discovery of foreign assets in any past year would be subject to examination by the Federal Board of Revenue (FBR) under the new law.

For local assets, the time limitation of the past six years has been maintained, he added.

KTBA said it mentioned anomalies in the tax reforms package in budget proposals submitted to FBR for deliberations.