Golden chance to whiten black money

| 1pc tax to legalise up to Rs50 million | PPP blocks govt effort to rush income tax bill through NA

ISLAMABAD - Prime Minister Nawaz Sharif on the first day of the New Year came up with a big offer to the non-tax filers to whiten their black money by paying a nominal one percent tax.
This is the second Voluntary Tax Compliance Scheme launched by the premier in around two years. Through the new amnesty scheme, the tax cheaters and the corrupt can legalise their wealth of up to Rs50 million worth.
The non-filers would not be bound to submit wealth statement having annual income of up to Rs1 million. No question about source of investment would be asked on declarations of assets of traders having annual income of above Rs1 million.
Speaking at the launching ceremony of the scheme here, Nawaz said the government had successfully addressed the burning issue of tax in consultation with the stakeholders. “I am very happy at the peaceful resolution of withholding tax issue being faced by traders and businessmen,” he said.
He hoped such positive attitude in resolving issues will usher in an era of success in every sector of the country’s economy. “Our economy is moving from stable to vibrant as a result of the government’s prudent policies,” he claimed.
The ruling PML-N, which was the main critic of tax amnesty schemes in PPP’s era, even attempted to pass the Income Tax (First Amendment) Bill 2016 after introducing its draft in the house.
But PPP senior lawmaker Naveed Qamar blocked Finance Minister Ishaq Dar’s effort to get it passed by quoting rules and procedure, and conduct of business in the assembly. “The bill should be referred to the standing committee concerned for discussion before conducting voting to pass the bill,” said Naveed.
The bill sets conditions for availing the tax amnesty scheme and seeks penalty in the form of higher taxes for those who would keep hiding their wealth.
In November 2013, Prime Minister Sharif had also offered industrialists an amnesty scheme to legalise their up to Rs10 million black money in the name of increasing investment and broadening the tax base. However, neither the tax base expanded nor the investment picked up. This time too, the government has the same goals in mind.
Officials said the lucrative package was aimed at legalising the business capital of the traders on payment of nominal amount of tax. Under the scheme, business accounts could be regularised.
Four years exemption from audit was offered to the people who declare or legalise their business capital under the scheme.
The amnesty scheme has been designed for non-filers of income tax returns as well as those who file the returns but underreport the income to evade taxes, showed the draft of the Income Tax (First Amendment) Bill 2016. At present, less than 1 million people file income tax returns and the Federal Board of Revenue hopes the new scheme will add at least 1 million more people to the tax net.
In his speech, Finance Minister Ishaq Dar said the Voluntary Tax Compliance Scheme will be presented in the parliament to provide legal cover to beneficiaries. He said everyone except parliamentarians can benefit from the scheme. He said those convicted of terrorism, money laundering and under anti-narcotics laws also cannot benefit from the scheme.
Prime Minister’s Special Assistant on Revenues Haroon Akhtar Khan, in his speech, said Pakistan's economy was moving from stable to vibrant as a result of prudent policies. He said Statutory Regulatory Order worth Rs 223 billion had been abolished.
“Now SRO can only be issued with the approval of parliament,” he added. Khan said those who file their return of worth Rs1 million do not need to file wealth tax under the scheme.
FBR Chairman Nisar Mohammed Khan said that traders, using the scheme would be exempted from audit. Anjuman-e-Tajiran Chairman Khawaja Shafiq assured cooperation in the success of voluntary tax compliance scheme.
The premier in his speech also said his government was not perturbed by the challenges being faced by the country. “We have taken up the challenges and are doing well on the fronts of health, counter-terrorism and energy production,” he maintained.
The prime minister told the gathering that he had directed Finance Minister Ishaq Dar to reduce tax rates, enabling everyone to pay their taxes. “We have concluded the withholding tax issue at the advent of the New Year which is a very positive sign,” he added.
He said economic policies should be framed in consultations with traders, business community and others. He said his government believes in transparency in all matters and through transparency, it has saved billions of rupees in LNG based energy projects alone.
The prime minister said his government wanted to resolve all internal and external issues by consensus. Nawaz Sharif said Pakistan enjoyed good relations with all its neighbouring countries.
He said the government has to meet the challenges posed by terrorism and energy shortage at every cost. He said law and order situation in Karachi has improved a lot due to the steps taken by the government.
As far as the Income Tax (First Amendment) Bill 2016 is concerned, it says the non-filing traders in 2016 will have to declare three times more turnover than the one declared for availing of the scheme.
In case the turnover does not exceeds Rs50 million, the traders will pay 0.2 percent tax and when the turnover is more than Rs50 million but less than Rs250 million, they will pay Rs100,000 plus 0.15% of the excess amount. If the turnover exceeds Rs250 million, the traders will pay Rs400, 000 plus 0.1 percent.
According to the bill, traders who file income tax returns will be allowed to revise previously filed returns in order to declare the hidden income. They are required to pay a 10% higher tax than the tax paid according to the original return. In case of hidden untaxed income, the filers will declare the income by paying 1% income tax.
The taxpayer should pay 25% higher tax than paid for tax year 2014, as per the bill. Similarly, turnover tax should not be less than Rs30,000 for qualifying for the scheme. Moreover, they will also be required to pay 25% higher tax for tax years 2016, 2017 and 2018.
The ‘statement of objects and reasons’ bill stated that a major segment of national economy is undocumented and a large number of traders who are required to file their income tax returns are either persistent non-filers or filers but are underreporting their income and are depriving the national exchequer of its due share.
In view of the prevailing culture of massive non-reporting and under-reporting, it is expedient to provide a one-time opportunity to the filer as well as non-filer traders to regularise their tax affairs by adopting a special and simplified procedure for assessment of their tax. It is also expedient to further amend certain provisions of income tax law through the new income tax legislation.

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