Pakistan tax amnesty schemes,

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The top policy making body of the Federal Board of Revenue (FBR), the Board in Council, on Wednesday approved two tax amnesty schemes to be launched soon followed by a whistleblowing law.

The schemes would be launched as soon as the prime minister and cabinet approve them. The News published the details of the tax amnesty schemes and the proposed whistleblowing law on Wednesday. According to the FBR sources, except minor changes to what has been reported by this newspaper, the FBR Board had approved the tax amnesty schemes.

One of the amnesty schemes would primarily target the already identified 3.7 million people who have enough resources, travel abroad, own properties and have bank accounts but still don’t pay any tax. Such tax evaders would be allowed to pay Rs39,786 as tax to have their wealth declared valid. The FBR estimates collection of Rs176 billion revenue through this scheme.

In the other tax amnesty scheme, existing taxpayers and even others would be allowed to declare their hidden assets by paying only 1.25 to 1.5 percent of the value of the assets as declared by them. The 1.25 percent would be charged by the end of October whereas 1.5 percent would be applicable by December 31, 2012 when these tax amnesty schemes would end.

Following the tax amnesty schemes, the government would introduce a new law with effect from January 1, 2013 under which a crackdown would be launched against tax evaders on the basis of information provided by any citizen.

As decided by the FBR Board, the informer of a tax evader would be paid 30 percent of the hidden assets uncovered by him while 10 percent would be given to the taxman involved in the case. Those participating in these tax amnesty schemes would not be questioned about the sources of their income. They would become part of the documented taxpayer database besides generating huge revenues beyond the budgeted estimates.

The FBR authorities expect that these schemes will help phenomenally broaden the tax base in Pakistan, which is presently critically small. The FBR and National Accountability Bureau (NAB) have been in consultation to shape up the amnesty schemes in a manner that the desired results are achieved whereas President Asif Ali Zardari has also given his go-ahead in principle to the proposed initiatives.