Affluent people seek declaration of foreign assets at 2 percent tax

By end of last month, over $6 billion of overseas assets had been declared by Pakistani nationals on which they paid $290 million in taxes and the amnesty scheme has been extended to the 31st of July earlier this month

Affluent individuals are pushing the interim government to permit them to declare their foreign investment in shares at 2 percent tax under the offshore amnesty scheme which could losses to the tune of millions of rupees to the national exchequer.

According to sources in the central bank and Federal Board of Revenue (FBR), these power individuals sought a 60 percent lesser tax rate than the designated 5 percent under the offshore tax amnesty scheme, reported Express Tribune.

Both the government entities have exhibited resilience to this pressure and believe any concession given in contravention of the offshore tax amnesty scheme, could tarnish its name and open them to an investigation by anti-corruption and anti-graft bodies.

A meeting presided over by the interim finance minister Dr Shamshad Akhtar over the weekend in Karachi was unable to reach a decision after SBP asked the finance ministry to take the onus of clearing offshore investments in stocks and shares at a decreased rate of 2 percent.

Officials shared several wealthy individuals who hold big investments in foreign securities and in listed companies in Pakistan via offshore entities had asked to declare their investments at 2 percent only.

Mostly, investments in companies listed on the Pakistan Stock Exchange (PSX) are held via offshore entity or banks in countries termed ‘tax havens’.

Instead, these wealthy individuals want to avail the benefit of the decreased 2 percent tax without en-cashing their investments and investing in tax amnesty bonds.

However, tax and legal pundits tell the 2 percent rate is only applicable in the case where the assets are repatriated.

There are minute chances of the total $60 billion investment in shares and bank balances being declared, however if it transpires this could result in the government receiving $3 billion in taxes if individuals pay 5 percent tax on it.

If the government cedes to the request of these affluent individuals of allowing them to declare assets at 2 percent tax, the taxes amassed would be around $1.2 billion or 60 percent less than anticipated.

By end of last month, over $6 billion of overseas assets had been declared by Pakistani nationals on which they paid $290 million in taxes and the amnesty scheme has been extended to the 31st of July earlier this month.