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Foreign assets amnesty scheme: State Bank disapproves tax payment via exchange firms, non-banking wire transfer

By Our Correspondent
June 22, 2018

KARACHI: The central bank on Thursday disallowed tax payment under the foreign assets amnesty through exchange companies or non-banking wire transfer – a move that aims to bring more transparency in the scheme eyeing hundreds of billions in revenue ahead of its deadline on June 30.

“The tax payment cannot be made through exchange companies, money business services etc.,” the State Bank of Pakistan (SBP) said in a statement.

“The tax payment can only be made through banking channels either from the declarants’ own accounts or from the accounts of the declarants’ immediate family members i.e. his/her parents, children, spouse and siblings (brothers and sisters).”

In April, government announced tax amnesty scheme, which would expire by June 30, 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.

US ratings agency Moody’s, in a latest report, expected the government to fetch two to three billion dollars in foreign exchange inflows as a result of the tax amnesty scheme.

The SBP said the individuals need to send satisfactory documentary evidence, along with payment slip ID copies for generation of computerised payment receipt, to establish the relationship in case of payment through the immediate family members’ accounts.

The SBP amended its notification on procedure for repatriation of liquid assets and deposit of tax under Foreign Assets (Declaration and Repatriation) Act, 2018, issued on April 10.

The central bank said the balance in foreign currency accounts of the declarants or their family members, being maintained with banks in Pakistan as of March 31 or June 20, whichever is less, can be used for the tax payment’s purpose.

It said the declarants, having bank accounts outside Pakistan but presently residing in Pakistan, can also pay the tax in the US dollar by depositing the dollar-denominated cheques with the authorised branches of the National Bank of Pakistan (NBP) for collecting the proceeds for onward credit to the SBP account in the NBP New York branch.

“While the NBP has been advised to make special arrangements for expeditious collection of the cheque proceeds, it may take 7-10 days in collection of the proceeds,” it added. “The declarants using this payment option should be aware of possible delays in collection of the proceeds.”

The SBP further said the declarants should make sure that the funds being remitted to SBP are at least equivalent to the amount appearing in payment slip ID. The computerised payment receipt would only be issued if the funds appearing in the payment slip have been received in the SBP account, it added.

The SBP said the declarant can make two separate wire transfers or one at his/her choice, while repatriating liquid foreign assets.

“In case of one SWIFT message (wire transfer), he/she will give the signed statement of application of funds including the amount to be paid as taxes and the amount to be converted into PKR etc..”

The central bank said the funds can be remitted within three days of generation of the payment slip. “The remittance date means the date on which the declarants bank sends the funds in SBP account in New York through wire transfer and gives a copy of the SWIFT message to the declarant.”