Rs6,000 bn black money whitened through amnesty scheme

ISLAMABAD: While the tax amnesty scheme has failed to attract repatriation of billions of dollars into the national kitty mainly because of different restrictions and uncertainty on the political front, still Rs6,000 billion worth of black money has been whitened through this scheme.

By June 30, the FBR was able to collect Rs90 billion and $300 million tax through the amnesty scheme, which remains the most successful of the seven such schemes Pakistan had earlier announced. The major chunk of the money brought into the country will be invested in real estate, jacking up the property prices.

However, another official who played a key role in devising this scheme told this scribe that the basic idea was floated to bring in $2 to $3 billion from offshore assets but it required constitutional guarantees which the previous PML-N regime failed to manage in the wake of stiff opposition from its political opponents. Then the Financial Action Task Force (FATF) also opposed the scheme and the former premier announced the scheme oblivious to the FATF objection to the finance minister.

By the time the last government came to know about the concerns of FATF, it had already announced the scheme. The FBR and the government team had to struggle hard to remove the FATF concerns on the amnesty scheme and finally both sides evolved a consensus that criminal proceeds will not be availed through the scheme.

Then the SBP imposed certain restrictions that only the account holders or their relatives could send money for the amnesty scheme. The SBP took this step on the pretext that banks were under strict monitoring, so they had to be protected from any allegation of allowing dirty money into Pakistan.

Another factor that played a key role in the failure of the scheme was the uncertain political situation as it was argued that an investigation could be opened anytime in Pakistan and the example of privatization was cited in which investigations were opened after several years.

But sources within the FBR told this scribe that the domestic amnesty scheme would be successful because the tax machinery now possessed the valuable information against potential evaders and if they did not avail the scheme, then law would take its own course. Regarding the Pakistanis living on the foreign soil, they stated that the overseas Pakistanis would first protect themselves in the countries of residence, so they would not declare anything that could threaten them. “The overseas Pakistanis have been extraordinarily careful so they have not come up to expectations of those who prepared this scheme during the tenure of previous regime,” said the official sources. Another factor for receiving low taxes from abroad, the official said, was that the public office holders were barred from availing this scheme. Despite not allowing the potential owners, thousands of foreign assets were declared and whitened through this scheme and would now become part of the documented economy.

The FBR Spokesman, Dr Iqbal, told The News that the tax amnesty scheme for offshore assets was a success. He said the details of the scheme would be shared with the media soon.