ISLAMABAD: The Federal Board of Revenue (FBR) has notified rules for the implementation of the first tax amnesty scheme of the PTI government for whitening of undisclosed expenditures, sales and assets, including foreign assets, at nominal tax rates.
According to the details, the four-page document, called Assets Declaration (Procedure and Conditions) Rules 2019, was released late night for seeking objections and suggestions from all stakeholders with a deadline of May 22 before they are finalised.
The rules came almost five days after the promulgation of the Ordinance on May 15 to allow people for declaration of their undeclared assets, expenditures, and sales along with payment of taxes until June 30 this year.
The rules have four main pillars — manner, conditions, payment, payment of tax under other laws and revision of declaration.
For the purposes of incorporation of undisclosed assets and undisclosed expenditure, the declarant will file income tax return for the tax year 2018 and wealth statement or financial statement as the case may be as on June 30, 2018. This condition will be for those who did not file their tax returns for the tax year 2018. Those who did file will now have the option to revise their return and financial statement in case of companies or wealth statement in case of individuals.
The rules require the value of foreign assets to be declared in foreign currency and tax as well as default surcharges to be paid in foreign currency as well.
The scheme can be availed by all companies, associations of persons and individuals only to whiten their assets, expenditures and sales not declared until June 30, 2018. There is no provision for whitening undeclared incomes both domestic and foreign.
Under the scheme, assets within the country and abroad (except for real estate) can be whitened at a rate of four per cent. The whitened cash assets will have to be kept in Pakistani bank accounts. For people wanting to keep their whitened money abroad, a rate of 6pc will be charged.
For the declaration of real estate, its value will be considered 150pc of the FBR-assigned value to bring it on a par with the market rate. Similarly, the value of real estate will be considered 150pc of the DC value where the FBR value has not been notified or less than the DC rate. Moreover, under the current scheme, the persons are also allowed to enhance the declared value of immovable property.
The tax rate will be 1.5pc for whitening of domestic immovable properties (real estate). In case of foreign assets, the fair market value will be determined at the exchange rate prevalent on the date of declaration.
The tax rate on undisclosed sales or supplies is 2pc, which is also offered for the first time for bringing undeclared sales into the tax net. This will cover the sales or supplies chargeable to sales tax or federal excise duty, which has not been declared or has been under declared up to June 30, 2018.