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.


British PM May: 'I will not break up my country for EU Brexit deal'

Updated 21 September 2018
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British PM May: 'I will not break up my country for EU Brexit deal'

  • Theresa May hits back with angry statement after EU leaders rejected May’s Chequers plan
  • Sterling plummets as both sides warn they are planning for a no-deal scenario

LONDON: British Prime Minister Theresa May said on Friday Brexit talks with the European Union had hit an impasse, defiantly challenging the bloc to come up with their own plans a day after the bloc’s leaders savaged her proposals.
At a summit in Austria on Thursday, EU leaders rejected May’s “Chequers” plan, saying she needed to give ground on trade and customs arrangements for the UK border with Ireland.
The British media said the response had left her proposals in tatters, and May angrily struck back in a televised address from her Downing Street office, saying neither side should expect the impossible from the other.
“Throughout this process, I have treated the EU with nothing but respect,” May said. “The UK expects the same. A good relationship at the end of this process depends on it.”
Sterling extended its losses as May spoke, falling to as low as $1.3080, about 1.4 percent on the day, putting it on course for its biggest one-day drop this year, over growing fears Britain could leave the EU without any deal.
May has said the Chequers proposals for trade with the EU, which would resolve arguments over the border of Northern Ireland with the Irish Republic, were the only way forward. EU leaders in Salzburg repeated their view that the plans would undermine their cherished single market.
After the summit, EU leaders said they would push for an agreement next month, but both sides have warned they are planning for a no-deal scenario.
“It’s not acceptable to simply reject the other side’s proposals without a detailed explanation and counter proposals,” May said. “So we now need to hear from the EU what the real issues are, what their alternative is, so that we can discuss them. Until we do, we cannot make progress.”
May, who commands a majority in parliament only with the support of a small pro-Brexit Northern Irish party, said she could not agree to any deal which treated Northern Ireland differently to the rest of the United Kingdom.
The EU insists that there can be no hard border between the British province and the Irish Republic, with Northern Ireland remaining in the bloc’s customs union or effectively establishing a border in the Irish Sea if no alternative deal is reached.
“I will not overturn the result of the referendum nor will I break up my country,” she said. “We need serious engagement on resolving the two main problems in the negotiations and we stand ready.”
However, she said no matter what happened, the rights of three million EU citizens living in the United Kingdom would be protected.
Earlier, her Brexit Secretary Dominic Raab said some EU leaders had shown unstatesmanlike behavior in Salzburg.
“We’ve already compromised hugely with the Chequers proposals,” Raab told BBC TV. “What we’re not going to do is be salami sliced throughout this negotiation in a typical style that the EU engages in without movement on the other side.”
For the British media, the message from Salzburg had been clear. “Your Brexit’s broken,” the Daily Mirror newspaper said.
Newspapers led their front pages with a Reuters picture showing May, dressed in a red jacket, standing apparently aloof and alone from a mass of suited male EU leaders.
May faces a fight with angry Conservative lawmakers at her party’s annual conference from Sept. 30.
Many have voiced opposition to her plans, which they said would bind Britain into much EU regulation in return for free trade, and some would prefer a no-deal “hard Brexit” in March, despite warnings that would ravage the British economy.
“Theresa May’s Brexit negotiating strategy has been a disaster,” opposition Labour leader Jeremy Corbyn said. “The Tories have spent more time arguing among themselves than negotiating with the EU.
“The political games from both the EU and our government need to end because no deal is not an option.”
In response to May’s statement, the Confederation of British Industry and other business bodies said they wanted to see constructive dialogue, not rhetoric.
Last week, London Mayor Sadiq Khan added his voice to those including union and business leaders who said there should be a second Brexit referendum. Scotland’s top court ruled on Friday that the European Court of Justice should consider whether Britain could unilaterally change its mind on Brexit.
“The referendum was the largest democratic exercise this country has ever undergone,” said May, who has repeatedly ruled out a second vote following the original 2016 referendum. “To deny its legitimacy or frustrate its result threatens public trust in our democracy.”