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Tax relief amnesty scheme pakistan april 2018

A
Adnan Qamar

PM Abbasi's five-point tax reforms package CNIC numbers to be made NTN numbers to monitor tax compliance of all citizens. Income tax brackets and percentages to be revised. Complete tax exemption on annual income up to Rs1.2m; maximum percentage of 15pc to be levied on income above Rs4.8m per annum. Undeclared assets held locally or abroad to be declared after payment of nominal penalties. Those who avail scheme to be granted one-time exemption from accountability laws. Tax to be collected on all property transactions to be made uniform. Govt to have the right to purchase any property by paying 100pc over and above its declared value within six months of its registration. Government to monitor citizens' financial records and issue notices if they find evidence of tax evasion. Penalties to be decided in parliament.

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ECONOMIC REFORMS PACKAGE Islamabad April 2018
PML (N)S MANIFESTO FULFILMENT 2 Unleashing Economic Growth Building Credible Taxation system Focus on Second Generation Reforms Strengthening Investment Climate Deepening Financial Markets The reform agenda being unleashed is the fulfilment of the PML(N)s Manifesto The reform agenda being unleashed is the fulfilment of the PML(N)s Manifesto
CHANGES IN THE INDIVIDUAL TAX RATES a) Upto 1,200,000 0% b) 1,200,000 - 2,400,000 5% c) 2,400,000 - 4,800,000 10% d) 4,800,000 & above 15% 3
FOREIGN ASSETS DECLARATION AND REPATRIATION ORDINANCE Foreign exchange repatriation on 2% payment Foreign exchange repatriation will have 2 options: Bonds for 5 years at the rate of 3% per annum (6 month payment) [not encashable in year 1] All encashment in Pak rupee @ prevailing Interbank Dollar rate Local holders of forex can also buy this bond 4
Dollar account holders in Pakistan who have purchased dollars through undeclared money can also regularize on 2% payment FOREIGN ASSETS DECLARATION AND REPATRIATION ORDINANCE
FOREIGN ASSETS DECLARATION AND REPATRIATION ORDINANCE Declaration of Foreign Fixed Assets on 3% payment Foreign Fixed asset at market price but should be in no case less than the cost of acquisition Foreign Liquid assets including Cash/Securities/Bonds etc. held abroad and in local dollar accounts may be declared at 5% payment 6
FOREIGN ASSETS DECLARATION AND REPATRIATION ORDINANCE All remittances less than 100,000/year/person will continue without any questions from any agency about the source and enjoy tax exemptions All remittances greater than 100,000/year/person will enjoy tax exemptions but only FBR may question the source Any new foreign exchange accounts can only be opened by tax filers 7
PAKISTAN PROGRESS ON ACCESS TO INTERNATIONAL INFORMATION Pakistan has signed and ratified the OECDs Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This has established an exchange of information mechanism for tax purposes with more than 100 countries, including tax havens. This has enabled us to seek information on banking and other details of our residents from these countries for taxable periods 2018 onwards and for tax matters involving intentional conduct which is liable to prosecution, for earlier taxable periods as well. Pakistan is also commencing automatic exchange of financial accounts information under the OECDs umbrella from September 2018 onwards. We will receive detailed information about banking and other financial accounts of our residents automatically each year from other countries and jurisdictions. All this will expose Pakistanis hidden offshore accounts and assets to government and help contain cross border tax evasion. 8
VOLUNTARY DECLARATION OF DOMESTIC ASSETS ORDINANCE All undeclared incomes earned before June 30, 2017 on all local assets (gold, bonds, property etc) can be regularized on a payment of 5% FBR rate on property being abolished from 1st July 2018 and provinces being requested to abolish DC rate No purchase of property over Rs. 4 million is possible for non- filers of tax returns from 1st July 2018 9
VOLUNTARY DECLARATION OF DOMESTIC ASSETS ORDINANCE CNIC to be the tax number Reduced tax incidence: Maximum 1% tax (local and provincial) for registration of property being recommended At Federal level Adjustable Advance Income Tax being reduced to 1% 10
VOLUNTARY DECLARATION OF DOMESTIC ASSETS ORDINANCE Federal Government to have power to buy individual properties anywhere in Pakistan within six months of registration for: 100% more for properties registered in FY 2018-19 (50%) 75% more for properties registered in FY 2019-20 (57%) 50% more for properties registered in FY 2020-21 & thereafter (67%) 11
EXEMPTIONS The Foreign Assets Declaration and Repatriation Ordinance is not valid for the following categories: Money laundering Drug smuggling Terror financing It is not applicable to public office holders/ people in service of Pakistan including their spouses and dependent children 12
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Tax relief amnesty scheme pakistan april 2018

  • 1. 0
  • 3. PML (N)S MANIFESTO FULFILMENT 2 Unleashing Economic Growth Building Credible Taxation system Focus on Second Generation Reforms Strengthening Investment Climate Deepening Financial Markets The reform agenda being unleashed is the fulfilment of the PML(N)s Manifesto The reform agenda being unleashed is the fulfilment of the PML(N)s Manifesto
  • 4. CHANGES IN THE INDIVIDUAL TAX RATES a) Upto 1,200,000 0% b) 1,200,000 - 2,400,000 5% c) 2,400,000 - 4,800,000 10% d) 4,800,000 & above 15% 3
  • 5. FOREIGN ASSETS DECLARATION AND REPATRIATION ORDINANCE Foreign exchange repatriation on 2% payment Foreign exchange repatriation will have 2 options: Bonds for 5 years at the rate of 3% per annum (6 month payment) [not encashable in year 1] All encashment in Pak rupee @ prevailing Interbank Dollar rate Local holders of forex can also buy this bond 4
  • 6. Dollar account holders in Pakistan who have purchased dollars through undeclared money can also regularize on 2% payment FOREIGN ASSETS DECLARATION AND REPATRIATION ORDINANCE
  • 7. FOREIGN ASSETS DECLARATION AND REPATRIATION ORDINANCE Declaration of Foreign Fixed Assets on 3% payment Foreign Fixed asset at market price but should be in no case less than the cost of acquisition Foreign Liquid assets including Cash/Securities/Bonds etc. held abroad and in local dollar accounts may be declared at 5% payment 6
  • 8. FOREIGN ASSETS DECLARATION AND REPATRIATION ORDINANCE All remittances less than 100,000/year/person will continue without any questions from any agency about the source and enjoy tax exemptions All remittances greater than 100,000/year/person will enjoy tax exemptions but only FBR may question the source Any new foreign exchange accounts can only be opened by tax filers 7
  • 9. PAKISTAN PROGRESS ON ACCESS TO INTERNATIONAL INFORMATION Pakistan has signed and ratified the OECDs Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This has established an exchange of information mechanism for tax purposes with more than 100 countries, including tax havens. This has enabled us to seek information on banking and other details of our residents from these countries for taxable periods 2018 onwards and for tax matters involving intentional conduct which is liable to prosecution, for earlier taxable periods as well. Pakistan is also commencing automatic exchange of financial accounts information under the OECDs umbrella from September 2018 onwards. We will receive detailed information about banking and other financial accounts of our residents automatically each year from other countries and jurisdictions. All this will expose Pakistanis hidden offshore accounts and assets to government and help contain cross border tax evasion. 8
  • 10. VOLUNTARY DECLARATION OF DOMESTIC ASSETS ORDINANCE All undeclared incomes earned before June 30, 2017 on all local assets (gold, bonds, property etc) can be regularized on a payment of 5% FBR rate on property being abolished from 1st July 2018 and provinces being requested to abolish DC rate No purchase of property over Rs. 4 million is possible for non- filers of tax returns from 1st July 2018 9
  • 11. VOLUNTARY DECLARATION OF DOMESTIC ASSETS ORDINANCE CNIC to be the tax number Reduced tax incidence: Maximum 1% tax (local and provincial) for registration of property being recommended At Federal level Adjustable Advance Income Tax being reduced to 1% 10
  • 12. VOLUNTARY DECLARATION OF DOMESTIC ASSETS ORDINANCE Federal Government to have power to buy individual properties anywhere in Pakistan within six months of registration for: 100% more for properties registered in FY 2018-19 (50%) 75% more for properties registered in FY 2019-20 (57%) 50% more for properties registered in FY 2020-21 & thereafter (67%) 11
  • 13. EXEMPTIONS The Foreign Assets Declaration and Repatriation Ordinance is not valid for the following categories: Money laundering Drug smuggling Terror financing It is not applicable to public office holders/ people in service of Pakistan including their spouses and dependent children 12
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