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
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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.


China-US trade talks ‘making a final sprint’ — state media

U.S. Treasury Secretary Steven Mnuchin shakes hands with Chinese President Xi Jinping as U.S. Trade Representative Robert Lighthizer, left, and Chinese Vice Premier Liu He, right, look on before proceeding to their meeting at the Great Hall of the People in Beijing, China February 15, 2019. (REUTERS)
Updated 16 February 2019
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China-US trade talks ‘making a final sprint’ — state media

  • US duties on $200 billion in imports from China are set to rise to 25 percent from 10 percent if there is no deal by March 1 to address US demands

SHANGHAI: Chinese state media on Saturday expressed cautious optimism over trade talks between the United States and China, a day after President Xi Jinping said a week of discussions had produced “step-by-step” progress.
Xi made the comments at a meeting on Friday with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Beijing, after a week of senior- and deputy-level talks.
The People’s Daily, the official paper of the ruling Communist Party, said in a commentary that Xi’s meeting with US negotiators had affirmed progress made in previous talks and “injected new impetus into the next stage of the development of Sino-US trade relations.”
The talks “have made important progress” for the next round of negotiations in Washington next week, the paper said in its domestic edition.
“It is hoped that the two sides will maintain the good momentum of the current consultations and strive to reach an agreement within the set time limit,” it said.
US duties on $200 billion in imports from China are set to rise to 25 percent from 10 percent if there is no deal by March 1 to address US demands that China curb forced technology transfers and better enforce intellectual property rights.
In its overseas edition, the People’s Daily said “zero-sum thinking and games where you lose and I win can only create losses for both. Only on a basis of mutual respect and equal treatment, through dialogue and consultation, can we find a solution acceptable to both sides.”
An English-language editorial in the Global Times, which is published by the People’s Daily, said news that China had consulted on the text of a memorandum of understanding “shows the two sides have made unprecedented progress.”
“The MOU and next week’s talks both show that the seemingly endless China-US trade negotiations, like a marathon, are making a final sprint,” it said.
The newspapers cautioned that any agreement would have to be in the interests of both the United States and China.
“There are still obstacles to be overcome, and no one should underestimate how daunting a task the two sides face trying to resolve all the differences that have long existed between them in one clean sweep,” the official English-language China Daily said in an editorial.