Benami assets’ possession to cause seizure of bank accounts, assets and 7-year jail: Whiten black money by June 30

ISLAMABAD: The government Tuesday unveiled fresh tax amnesty for whitening black economy by paying 4 percent on cash assets held within Pakistan, 6 percent if cash assets are kept abroad. The amnesty will lapse on June 30.

Adviser to PM on Finance Dr Abdul Hafeez Shaikh said that the rate for availing amnesty scheme would go up by 2 percent from 4 to 6 percent who would declare their money or assets owned abroad, but would not bring back into Pakistan.

Top official sources said that the FBR estimated to collect Rs170 billion with the help of this scheme. One PTI member said the government would fetch Rs300 billion into kitty with this scheme. However, the FBR sources are showing apprehensions about such response on this scheme. In the last amnesty scheme introduced during the PML-N regime, the FBR had collected Rs120 billion.

The latest scheme imposed restriction that the declared amount would have to be deposited into bank account for availing it.

The Benami Act that existed since 2017 had been operationalised by the government in Feb 2019. Now possession of Benami income or assets entails seizure of bank accounts and assets and imprisonment of seven years.

“The Benami law is operational and provide us stick that empowers FBR to imprison those found guilty of it. We want to provide last opportunity to those who want to avail this scheme. Now the data of all regulators such as FBR, SBP, SECP, Nadra and FIA as well as others were integrated to broaden the tax base,” Dr Abdul Hafeez Shaikh said while addressing a news conference for announcing tax amnesty scheme after the cabinet meeting.

Flanked by Special Assistant to PM for Information Firdous Ashiq Awan, Minister of State for Revenue Hammad Azhar, Chairman FBR Shabbar Zaidi and Member FBR Hamid Ateeq Sarwar, Dr Shaikh said the FBR obtained data about 150,000 account holders from 28 countries that would also help the FBR bring them into tax system.

This amnesty scheme will be available till June 30, 2019. The clearing of sales tax liabilities will be done at rate of 2 percent. The federal cabinet has approved Asset Declaration Scheme 2019 in its meeting held under chairmanship of Prime Minister Imran Khan.

To whiten real estate assets, the amnesty can be availed at rate of 150 percent and Hammad Azhar cited an example that if the FBR value of any property stood at Rs1 million then its declaration would go up to Rs1.5 million under this scheme.

“The objective of Asset Declaration Scheme is not to generate revenues but we want to provide last opportunity to whiten dead assets. We have come up with simple scheme which is easy to understand and implement. It is not aimed at harassment,” he said.

Dr Abdul Hafeez Shaikh said this scheme could be availed till June 30, 2019. He said that the public office holders were barred to avail the amnesty scheme. He said that the domestic assets could be whitened at rate of 4 percent. For real estate, the rate would be 150 percent on notified rate of real estate by the FBR and 1.5pc tax will have to be paid.

Dr Shaikh said Pakistan entered into IMF in its best interest. "Those who are opposing the IMF programme are the ones who had already done the same," he added.

He said actions such as reducing the gap between imports and exports, reducing losses of state-owned entities and curtailing expenditure are in favour of the country.

"Pakistan goes to the IMF again and again because it fails to increase its exports, foreigners remain reluctant to invest in the country and other issues,” he added.

Hammad Azhar said the person availing this scheme would have to become filer into tax system. This scheme, he said, was going to allow businessmen to revise their balance sheets on books. He said that this scheme was different from old ones because in the past it allowed to declare income cash in hands but now it was mandatory to deposit into banks for availing the scheme.

Shabbar Zaidi said the sales tax liabilities could be cleared by paying 2 percent tax on it.

When asked about claim of the government that it would be last programme of the IMF, Dr Shaikh said that if exports did not go up, trade gap remained wide, state owned enterprises (SOEs) continued to bleed and revenue mobilisation could not materialise, then the bigger challenges would haunt us. He said the government would protect electricity users using up to 300 units from any possible hike in tariff. When asked whether he could guarantee that there would be no hike in electricity and gas tariff, he replied that the government was going to provide subsidy of Rs216 billion in the upcoming budget and 75 percent consumers using up to 300 units would be protected from any hike. “The philosophy behind the plan is not to intimidate people but to encourage businessmen to participate in the legal economy,” he added.

Earlier, the federal cabinet approved the Asset Declaration Scheme at a meeting at the Prime Minister Office with Prime Minister Imran Khan in the chair. D. Shaikh briefed the cabinet members about the merits of the scheme.

It is the second such scheme in a year since the former government of the PML-N also introduced similar scheme in its last days.

The adviser on finance desired that it should be a people-friendly scheme, which will help to document the economy and bring more non-filers into the tax net instead of just generating funds. He directed the FBR to fine-tune the scheme to make it simple to understand and easy to implement, an official statement said, adding that the objective of the scheme should be to make the economy more tax-compliant and documented.

"We have tried to make this scheme very easy to understand and implement," the adviser said at the news conference, adding that the scheme has realistic targets with low rates. "The basic purpose of the scheme is not to generate revenue but to document the economy and to bring dead assets into the economy and make them functional," he said.

The amnesty scheme also has the facility for citizens to whiten their Benami accounts and properties before the Benami Transaction (Prohibition) Act, 2017, is enforced.

In what Azhar termed as the rectification of a "major mistake" from the last amnesty scheme, people will now be required to deposit all of their cash in hand into the bank and declare it along with the deposit slip as proof.

Dr Firdous Ashiq Awan told the media that the cabinet formally approved the Asset Declaration Bill, which will be enforced after getting the President's assent. She said the cabinet was informed that billions of rupees were spent in international litigations from national exchequer that increased from 6 in 2016 to 45 this year. She said 100 million dollars as fee has been paid during the last five years while 10 million dollars are to be paid this month in international legal fees.

She said the prime minister directed the Attorney General for Pakistan that all ministries should carefully do their homework before signing international agreements in order to avoid legal troubles.

Dr Firdous Ashiq Awan said Prime Minister Imran Khan has also directed to evolve a long-term policy in coordination with provinces to control inflation in the country. She said the cabinet approved taking measures for the facilitation of Pakistani citizens detained abroad on various charges. She said the prime minister directed to bring back Pakistani citizens from Malaysia after arranging required funding for that purpose.

Firdous Ashiq Awan said the cabinet also directed establishment of low-priced bazaars and availability of essential items at utility stores to facilitate common people during Ramazan. She said the cabinet approved appointment of Major General Umar Ahmed Bokhari as Director General of Rangers in Sindh.