Tax amnesty scheme: It’s an opportunity for those who have benami properties

ISLAMABAD: Adviser to PM on Finance Hafeez Shaikh said that one of Pakistan’s persistent issues is the lowest collection of tax, while the tax revenue is 11 to 12 per cent of our total GDP and that is also the lowest in the region. He said it should be found out why the rich of the country are far behind in paying taxes and our requirement is to feed a swellingpopulation with growing need of necessities. It is a densely populated country having 210 million people.

Speaking in Geo’s special transmission ‘Pakistan Keliye Kar Daalo’, he said that Pakistan needs a running economy, provision of infrastructure that also helps to provide jobs to the youth. He said the people should be given education, health and justice. He said self reliance will help improve the judiciary and maintain security.

The Adviser on Finance said that we should start collecting taxes and avoid being dependent on foreign loans. He said the government is eagerly trying to be self reliant and come out of the posture of being handicapped. He elaborated that Pakistan’s economy is mostly out of the tax net; for example, the people may have Benami properties in others’ names and cash as well but now we are eliminating the Benami system.

Hafeez said the government wants to give an opportunity to those who have benami properties and accounts to legalise all those wealth properly prior to the action that will be taken according to the Benami law that allows confiscating all such properties and wealth. He said people could come into the tax net and get their money legalised. He said if one has cash, he can legalise his money only by paying four percent of the total Benami properties and accounts with the condition to put all their money into the bank.

The finance minister said the people could also get their properties legalised by just paying one and a half per cent of the total amount of the properties. He said the government wants to enhance the tax net and is also trying to ease the mechanism, so the people could come into the tax net and economic cycle could run.

Hamid Mir asked that most of the people were not registered with the FBR and they did not have NTNs, so could such a person be benefitted by the tax amnesty scheme.

Shabbar Zaidi said yes, it is possible to get benefitted by the tax amnesty scheme though they do not have NTN or not registered with the FBR. Zaidi said if anyone wants to declare their assets in Pakistan, he has to register with the FBR and to become a tax filer prior to declaring any assets.

Hamid Mir asked the people who have properties and wealth in the name of their servants, relatives and friends, if they want to declare everything voluntarily. Is there any chance to have action against them?

Shabbar Zaidi said that no action will be taken against anyone who wants to avail the amnesty scheme. He said that the people could declare their Benami accounts and no action would be taken against them. He said we have included two sections that no proceedings will be taken and confidentiality. He said assets scheme was launched in 2018 but the FBR did not take any action and stopped proceedings. “I can promise you all and if anyone has any problem related to this issue can come to me and we would certainly protect them.”

Hamid Mir said only in the Pakistani gold market, there at least three tonnes of undeclared gold. Now our discussion may motivate them and they may come to declare the gold.

Hafeez said that we have decided some fundamentals that if anyone would declare his wealth and make them white, their data will not be used against them, adding that surety has been given in writing so the people who wanted to make their money white should come without any worry. He said they should trust the government.

Hamid Mir said there was a man to whom at least four hundred vehicles are registered. Hafeez Shaikh said that the amnesty scheme is to bring people into the tax net. He said the government has the right to take action against those who do not pay their taxes despite all the opportunities.

The Chairman FBR, Shabbar Zaidi, said that Adil Farooqui had asked two different questions. He said since the scheme was launched, the under declared is concluded in the basic documents and in the law. He said it is not in favour of Mr. Farooqui, as if anyone has bought properties or other assets that is under declared, for example the market price of a building is Rs 50 million but the declared amount is 20 million, while he has to pay only four percent to legalise the properties. It would be positive not negative. To legalise under declared through amnesty is not negative and the law was made earlier not now.

Regarding the second question of Farooqui, Zaidi said he could understand that if the undervalued properties are under declared and there is a differential, so the capital gain tax will be imposed and if it will, then the rate of capital gain tax will be so high. He said the second question is not about amnesty but in the financial bill the time of taxability of capital gain is increased and he wants to reduce the timing.

Adviser on Finance Hafeez Sheikh said Adil Farooqui’s question started from Benami and came to the filer. He said every Pakistani has the right to declare his under declared assets or Benami accounts which he in the past did not declare but now wanted to declare. He said it is open to all Pakistanis if they have Benami accounts or under declared properties and not declared for any reason may have the chance to declare their properties or Benami accounts to make them legalised and can get into the tax net through the declaration.

Hamid Mir said there was a question that if anyone declared his assets, then he has to pay tax on it but he does not have any cash to pay such amount, then does he have an opportunity to pay the tax in installments.

Hafeez Sheikh said the installment process is also included in the scheme to facilitate people. People who have been complaining for not having time, the installment process is for them but they have to declare their Benami accounts. He said the declaration in which the immediate transfer of money is not involved, then one has the option.

The Adviser on Finance said if the remittances sent from the Pakistani diaspora have already been taxed, they will not be taxable in Pakistan. He said because they are already in the tax system, so the money is white. He said they are just earning money and saving them here without paying any tax.

Shabbar Zaidi said the overseas Pakistanis should not be worried about the scheme but those whose income is chargeable tax in Pakistan and they did not pay the tax.

Hafeez Sheikh said for example if a Pakistani earned money here in Pakistan without paying tax and went to England and now having one million pounds and wants to legalise his money, he can avail the amnesty scheme.

Chairman FBR Shabbar Zaidi said if the plot is older than three years, it is not taxable if it is sold. The question is the apparent value of the property in Pakistan is always less than the fair value. Actually he