The Pakistan Tehreek-i-Insaf government has prepared its first tax amnesty scheme to legitimise all kinds of offshore and onshore undeclared assets of people at the rates of five to 10 per cent. According to media reports, Prime Minister Imran Khan would soon approve the new tax amnesty scheme and then a summary will be sent to the cabinet for approval.
This move reportedly coincides with the implementation of the Benami Act in March 2019 in line with its efforts to document the economy and it also coincides with a new global anti-tax evasion scheme that is operational under a multilateral tax convention on the avoidance of double taxation and recommendations of Financial Action Task Force.
Finance Minister Asad Umar told media that the scheme was being designed in a fashion to document the economy. The minister also said the government had done its homework for a crackdown on those who were not filing tax returns and those who did not exist on the tax roll.
He said that the government had received returns of 1.8 million this year and in the next two years, the target was to take this number up to five million.
In the past five years, the PML-N government had offered four tax amnesty schemes to people. The last amnesty scheme of the PML-N government was designed in a fashion to encourage people only to declare their assets but avoided documentation.
Under the proposed scheme, the government will bar all those holding any public office since the year 2000 from availing the tax amnesty scheme in an attempt to address concern that former heads of government and state can avail the assets whitening package. The scheme is not meant to offer amnesty to public office holders who have pile up money through corruption and other illegal means.
According to the estimates of FBR, the scheme will be able to generate between Rs300 billion and Rs400 billion.
Currently the country is facing difficult time because of the prevailing economic crisis. Due to the poor performance of the government in economic sector, the government is being severely criticized from all walks of life in the country. The government is facing shortfall in tax collection, inflation is increasing, export sector is not witnessing growth and current account deficit is not decreasing. In these circumstances, government has decided to launch new tax amnesty scheme to generate more revenues and increase tax net. Although we should not doubt government’s intentions but if we see the history of past’s amnesty schemes, all were failed to get desired results. The government needs to introduce structural reforms to permanently fix loopholes in the economy because such amnesty schemes cannot be a long-term solution to current economic problems.