Over 55,000 people declare domestic, offshore assets under Pakistan tax amnesty

The tax amnesty schemes aim to boost country’s declining foreign exchange reserves and increase the number of income tax payers. (AFP/file)
Updated 12 July 2018
0

Over 55,000 people declare domestic, offshore assets under Pakistan tax amnesty

  • Almost $40 million repatriated under tax amnesties, Ministry of Finance claims
  • Low tax rates and OECD multilateral convention play key role in asset declaration, say analysts

KARACHI: Pakistan has had an unprecedented response to a new tax amnesty, with more than 55,000 people declaring local and foreign assets worth trillions of rupees, according to the country’s Ministry of Finance.

The Pakistan government had earlier announced two tax amnesties for undisclosed income, and foreign and domestic assets.
The schemes aim to boost country’s declining foreign exchange reserves and increase the number of income tax payers, now a mere 1.2 million.
“During a time when the law and order situation in the country was at its worst, people started investing in other countries. As the situation has normalized, they are now coming back,” former president of the Federation of Pakistan and Chambers of Commerce and Industry (FPCCI), Zubair Tufail, told Arab News.
“So far, 55,225 declarations have been filed in which the declared value of foreign assets is around 577 billion rupees ($4.8 billion) and 1,192 billion rupees for domestic assets. Declarants have paid about 97 billion rupees of which almost 36 billion ruppes have been collected on foreign assets and 61 billion rupees on domestic assets,” the finance ministry said on Wednesday. It added that “$40 million has been repatriated.”
Pakistan’s Federal Board of Revenue (FBR) hopes to declare up to $4 billion in returns. “With the trend of asset declarations and feedback from tax consultants and chartered accountants, the final figure can be close to $3-4 billion,” FBR spokesperson Dr. Muhammad Iqbal said.
The FPCCI expects that by the closing date of the schemes, tax collection will be up to 250 billion rupees.
Tufail said: “There is no need to extend the date. It is enough and people should take this opportunity.”
The closing date for the amnesty was extended from June 30 to July 31, 2018, due to procedural challenges faced by declarants in the payment of tax on foreign assets and repatriation of liquid assets.
The amnesty for foreign assets applies to both liquid and immovable assets such as bank accounts, shares and mortgaged properties at rates ranging between 2 to 5 percent. A special tax rate of 2 percent is applicable to liquid assets on repatriation.
The government has provided legal cover and promised confidentiality of declarants’ information under both amnesties. Information gained during the scheme cannot be used as evidence under any other law.
The State Bank of Pakistan (SBP) has allowed declarants to deposit tax in US dollars via wire transfer. The government’s US dollar denominated amnesty rules also authorizes the SBP to issue bonds with a maturity period of five years and annual profit of 3 percent to be paid semi-annually.
Analysts say that two major factors explain the overwhelming response to the schemes: The low rate of 2 to 5 percent; and Pakistan being a signatory to the OECD Multilateral Convention, which provides access to information about offshore financial accounts of Pakistani residents from September 2018.
“The sword of the OECD is hanging over the heads of those hiding assets abroad,” senior economist Muzzamil Aslam told Arab News. “On the other hand, the change in regulations is paving the way for the declaration of local assets at attractive rates, which is also enticing.”
Pakistan hopes revenues collected through the tax amnesties will help to reduce poverty and boost development.


Dubai eyes stronger business, investment ties with Egypt

Competitive advantage: Dubai’s reputation as a wealth generator and investment stronghold continues to drive the city’s growth. (Reuters)
Updated 23 July 2018
0

Dubai eyes stronger business, investment ties with Egypt

  • Dubai’s global reputation as a wealth generator and investment stronghold continues to drive the city’s growth and was a matter of interest to the visiting Egyptian delegates

Dubai has moved to further strengthen the emirate’s business and investment ties with Egypt, following meetings with a high-level Egyptian delegation.

During the discussions held in Dubai, Dubai FDI and Egyptian delegates from the General Authority for Investment and Free Zones appraised the many foreign investments coming into the city as a result of the government’s intensive efforts to create a business-friendly environment.
Dubai FDI (the investment agency of the Dubai Economic Development Department) also took the opportunity to explain its mandate and role in creating a business-appropriate landscape to attract international companies and help stimulate capital growth.
Khalid Al-Boom, Deputy CEO of Dubai FDI, who welcomed the Egyptian officials, said that Dubai and Egypt’s joint efforts and deepening relations constitute a significant boost to the government’s initiative to make Dubai one of the most sustainable and competitive business hubs in the world. Al-Boom also said that the visit would further reinforce government-to-government ties and promote sharing of knowledge of expertise.
He noted that the current favorable business environment would further push a new phase of economic and investment cooperation between the two countries to help realize their growth and development goals.
“We at Dubai FDI are fully committed to continue on the path toward success and optimize Dubai’s transformation and potential to make the emirate’s one of the most stable economies in the Middle East and the world,” he concluded. The Egyptian delegates were introduced to local business, government, and legislative processes and procedures. Dubai FDI officials also discussed promising business opportunities and key services that benefit foreign companies operating in the emirate.
The Dubai Government has rolled out a comprehensive program to help foreign companies interested in starting their business in the city. The visiting delegation toured the Dubai Multi Commodities Center and the Dubai Silicon Oasis Authority, during which they were informed about the institutions’ best practices, development strategies, main service offerings, and major investment opportunities.
Dubai’s global reputation as a wealth generator and investment stronghold continues to drive the city’s growth and was a matter of interest to the visiting Egyptian delegates. They were informed that though Dubai moved away from traditional trading and looked to its natural resources for sustenance in the latter half of the 20th century, revenue from oil was soon complemented and later almost replaced with a knowledge-based and services driven economy.
The innovative businesses which establish themselves in Dubai are supported by the Emirate’s ambition to drive technology, pioneer new innovation and foster thought leadership.
Trade, logistics, financial services, hospitality and tourism, real estate, construction and manufacturing now make up more than 90 percent of business activity in the Emirate.
This diversification, along with Dubai’s strategic location, infrastructure and ease of business philosophy, make it a popular choice for local and international organizations to begin operations and expand into the Middle East.