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.


US-China trade deal hopes grow as oil prices decline

Updated 19 June 2019
0

US-China trade deal hopes grow as oil prices decline

  • Data suggested a smaller-than-expected fall in American crude inventories
  • Preparations underway for Donald Trump to meet Xi Jinping next week at the G20 summit in Osaka

LONDON: Oil prices declined on Wednesday as data suggested a smaller-than-expected fall in American crude inventories, as hopes for a US-China trade deal continue to grow.
Brent crude futures were down 51 cents at $61.72 a barrel.
US West Texas Intermediate crude fell 25 cents to $53.65 a barrel. On Tuesday, it had recorded its biggest daily rise since early January.
After weeks of swelling, US crude stocks fell by 812,000 barrels last week to 482 million, the American Petroleum Institute said on Tuesday, a smaller fall than the 1.1-million-barrel drop analysts had expected.
Official estimates on US crude stockpiles from the US government’s Energy Information Administration are due during afternoon trading.
US President Donald Trump offered some support, saying preparations were underway for him to meet Chinese President Xi Jinping next week at the G20 summit in Osaka, Japan, amid hopes a trade deal could be thrashed out between the two powers. Trump has repeatedly threatened China with tariffs since winning office in 2016.
European Central Bank President Mario Draghi also offered a boost, saying on Tuesday that he would ease policy again if inflation failed to accelerate.
Tensions remain high in the Middle East after last week’s tanker attacks. Fears of a confrontation between Iran and the US have mounted, with Washington blaming Tehran, which has denied any role.
Trump said he was prepared to take military action to stop Iran having a nuclear bomb but left open whether he would approve the use of force to protect Gulf oil supplies.
On Wednesday, oil markets shrugged off a rocket attack on a site in southern Iraq used by foreign oil companies.
“It is interesting to note that the crude oil futures market could not rally on hawks planting bombs in the Strait of Hormuz but could rally on doves planting quantitative easing,” Petromatrix’s Olivier Jakob said in a note.
“This is an oil market that doesn’t know how to react when an oil tanker blows up but knows how to react when the head of a central bank makes some noise.”
Members of the Organization of the Petroleum Exporting Countries have agreed to meet on July 1, followed by a meeting with non-OPEC allies on July 2, after weeks of wrangling over dates.
OPEC and its allies will discuss whether to extend a deal on cutting 1.2 million barrels per day of production that runs out this month.