News Desk |
Dr Hafeez Sheikh, the newly-appointed prime minister’s adviser on finance, has raised objections on the recently-proposed tax amnesty scheme and has instructed the Federal Board of Revenue (FBR) to make changes in it to simplify it further.
In the first clear departure from the plans of the former finance minister Asad Umar, Sheikh while raising objections on the classification has disallowed the design of the scheme, the local media reported.
The adviser “reviewed the proposed Assets Declaration Scheme 2019 in detail with FBR officials and instructed them to fine-tune the scheme to make it simple to understand and easy to implement,” a handout issued by the Finance Ministry read.
According to a media report opposing the general notion of social media users, Sheikh came to meet Prime Minister Imran Khan 10 days ago when Umar was on a trip to Washington.
In the first meeting with the officials of the FBR, Sheikh has directed them to come up with a more simplified version of the scheme. He rejected the suggestion to introduce six types of tax rates for various categories of assets.
When the meeting started, the FBR officials gave a detailed presentation on the earlier tax amnesty scheme introduced by Pakistan Muslim League-Nawaz (PML-N) government and the first proposed amnesty scheme of the Pakistan Tehreek-e-Insaf (PTI).
Following the presentation, Sheikh was of the view that the PTI’s scheme appeared to be an improved version of the PML-N’s tax amnesty scheme. Subsequently, he directed the officials to fine-tune the design to improve it.
Read more: PTI set to launch its own amnesty scheme but how effective…
While focusing on the scope and features of the scheme, Sheikh told the officials that the purpose of the scheme should be to make the economy more tax compliant and documented.
Did Sheikh Meet PM 10 Days Before Asad’s Departure?
On April 19, the government appointed Sheikh as the adviser to the prime minister on finance, revenue, and economic affairs after the ex-finance minister stepped down. As per the notification, Sheikh would serve as the adviser to the PM with the status of a federal minister. He has held the same position during the tenure of the former president Asif Ali Zardari between 2010 and 2013.
According to a media report opposing the general notion of social media users, Sheikh came to meet Prime Minister Imran Khan 10 days ago when Umar was on a trip to Washington. It is unclear if Sheikh, who was living in the United Arab Emirates before being appointed as the adviser, has formally joined the PTI or not.
A charge of 45 percent was levied on the assets declared under the scheme. Earlier, India had introduced “Voluntary Disclosure of Income Scheme” in 1997.
During the meeting, the officials said, Sheikh, did not show urgency over the tax amnesty scheme and sought more deliberations on its design and classification. The federal cabinet has already deferred the approval of the scheme twice and, with further deliberation, it might not be presented in the next meeting either.
Apart from the changes proposed in the proposed Assets Declaration Scheme 2019, the cabinet expressed concerns over the possible political implications of the scheme going against the PTI’s core values of fighting corrupt practices.
PML-N’s Tax Amnesty Scheme
The PML-N’s tax amnesty scheme had resulted in the whitening of assets worth Rs2.5 trillion in return for Rs124 billion in taxes. Over 82,000 people had availed the previous tax amnesty scheme. As earlier reported in the local media, the FBR had suggested a minimum of five percent, 10 percent and a maximum 15 percent rate for the repatriation of offshore assets.
Read more: PML-N’s ‘volatile’ amnesty scheme is here to stay for another month
For the declaration of domestic assets, the report added, it had proposed 10 percent, 15 percent, and 20 percent rates. For clearance of Benami assets, the proposed rates were 15 percent, 20 percent, and 25 percent. Earlier, the report said, the idea was to charge the highest rates from those possessing Benami assets, but now it seems they would be able to legalize their wealth without much trouble.
Tax Amnesty Schemes in India
According to the Indian media reports, a four-month amnesty for tax evaders in 2016 had resulted in the declaration of hidden assets worth nearly $10bn. The amnesty had attracted 64,275 declarations, with the average amount declared standing at Rs10.2m.
The 2016 “Income Declaration Scheme” had allowed citizens to report assets previously undeclared to the tax authorities without being prosecuted. A charge of 45 percent was levied on the assets declared under the scheme. Earlier, India had introduced “Voluntary Disclosure of Income Scheme” in 1997.
Read more: World Bank concerned over the macroeconomic stability of Pakistan
In the erstwhile scheme, income or assets worth INR333.39bn were voluntarily declared and an aggregate tax of INR97.6bn was paid to the government.