The recent tax amnesty scheme announced by the prime minister includes relief for tax dodgers who have concealed their wealth either in Pakistan or abroad. The country’s top tax authorities believe that hundreds of thousands of Pakistanis have not declared their assets abroad worth $300 billion, particularly in Dubai, London, New York, Singapore and Switzerland in the past three decades.

They also hope that Pakistanis could repatriate up to $3-4 billion under the new scheme. Officials associated with the Federal Board of Revenue (FBR), Federal Investigation Agency (FIA), Securities & Exchange Commission of Pakistan and State Bank of Pakistan (SBP) confirmed that 98 per cent investors have not declared their offshore assets.

After the revelation of hidden assets of Pakistanis through Panama Papers, and while hearing the case against the then prime minister Nawaz Sharif, the Supreme Court (SC) of Pakistan also pledged to kick-off a crackdown on such illicit wealth (a petition of JI is still pending with the SC which seeks action against all offshore companies owners) The Panama Papers leak had featured more than 450 Pakistani nationals, detailing their offshore bank accounts, including the children of then Prime Minister Nawaz Sharif in April 2016.

Opposition parties have taken the government to task for introducing such amnesty at a time when it has only six weeks left to complete its five-year term. "Under the PML-N governments, all schemes have been introduced for the benefit of capitalists, big businesses and the ruling elite. This is very unfortunate," is how Senator Raza Rabbani reacted soon after the amnesty was announced.

The government, as part of its policy for introducing broader tax reforms, has promised under the current amnesty scheme not to prosecute tax evaders if they revealed their wealth in an attempt to get their undeclared assets whitened. The amount of $3-4 billion expected to be generated through this scheme seems a tiny fraction of the tax Pakistani authorities should get from its around 220 million population.

TNS approached researchers and officials associated with FBR, SBP, Securities & Exchange Commission of Pakistan (SECP) and FIA who estimate that overseas Pakistanis have sent around $120 billion in joint accounts since 2003 and an estimated $180 billion in real estate business abroad. Pakistani own properties/wealth $20 billion in London, $25 billion stashed in various banks of Switzerland, $30 billion through properties in Dubai, $10 billion in New York, $15 billion in Singapore and rest of the investments have been in rest of the world, these institutions estimate.

FBR officials told TNS that Pakistan’s super rich have made merry in many of world’s luxury capitals away from the prying eyes of their compatriots, Dubai in particular. The physical distance has seemed to work for a long time since the tax authorities have limited capacity to trace their properties.

According to official documents available with TNS, over 7,000 Pakistanis have bought properties worth an estimated Rs1.1 trillion in the heart of Dubai in the past one-and-a half-decade. Interestingly, majority of these Pakistani nationals did not disclose these properties in their annual returns and were said to be moving their assets out of country to avert getting caught in the event of a serious crackdown on this unaccounted for money. This list of "who’s who" includes politicians, some of whom are members of the parliament, retired generals, former judges, real estate tycoons, businessmen, bureaucrats, lawyers, actors, singers, and a few media personalities.

Key members of the Working Group on Foreign Assets (a high powered committee comprising 10 members formed by the SC to resolve the foreign assets case about Pakistanis who owned properties/accounts abroad) under its suo motu action said they have no doubt that the funds invested in properties in London, New York, Dubai and banks in Switzerland and other countries have mostly been transferred through ‘hundi’ and ‘hawala’ network and thus no money trail can be found for such transactions. The government announced new amnesty scheme for all those Pakistanis who could get benefit from this scheme by declaring their off shore assets, undeclared wealth and hidden propertied abroad.

"The foreign tax administrations were also not cooperating in furnishing full particulars of Pakistani owners of properties within their territorial jurisdiction to Pakistani tax authorities," said Senator Haroon Akhtar, Prime Minister Shahid Khaqan Abbasi’s aide on revenue, who was part of this new scheme. Akhtar hopes that "thousands of Pakistanis would bring around $4-5 billion back home but many of them might not declare their undeclared assets. The volume of tax filers would create history and the government hopes to get registered more than 0.5 million filers by end of this year."

Tax experts say that all such persons or individuals who have acquired properties abroad and have not reported those in their wealth statements filed with FBR can be prosecuted criminally under Sections 192 and 192-A of the Income Tax Ordinance 2001, in addition to other penal provisions of the said ordinance. "Tax dodgers are also in violation of the provisions of Anti Money Laundering Act for having reportedly channeled their (mostly ill-gotten) money abroad through illegal instruments such as ‘hundi’ and ‘hawala’," an FIA official told TNS.

Shabbar Zaidi, who is serving the Supreme Court as a member of the Working Group on Foreign Assets is not too optimist about this scheme, saying overseas Pakistanis may not bring their whole investments back to their homeland. "Only 2 per cent Pakistanis might transfer their wealth to their homeland -- but the FBR estimates that they might collectively declare about $50billion leading to $2 billion in shape of taxes."

About complications of bringing undeclared assets of Pakistanis back to the home country, Zaidi says, "it’s a tricky issue. Tax authorities don’t have direct access to Pakistanis’ data -- government struggles to sign agreements with friendly countries to seize and repatriate foreign assets of Pakistani nationals."

Read also: Reluctant filers

About foreign assets, the SBP officials said, laws are clear. The Foreign Assets’ Declaration Law reads: "Any person who owns any moveable or immoveable properties, not being foreign exchange, in any country other than Pakistan, shall declare before SBP its description and value and the income derived from it. It [Law] shall all apply to all citizens of Pakistan, i.e., any person employed in any capacity in foreign country or a wage earner residing in a foreign country." Apparently, the tax evaders couldn’t care less.

"Sensing complications in dealing with such tricky issues linked to offshore accounts of Pakistanis, the government has introduced this scheme in an attempt to document the unregistered economy of the country," said Zaidi.