ISLAMABAD - After much deliberation, the federal cabinet has given its nod to the tax amnesty scheme that aims at encouraging people to disclose their hidden assets by 30th of June.

The package of concession named Asset Declaration Scheme (ADS), which has invited criticism for giving people chance to whiten their black money, was approved in a session chaired by Prime Minister Imran here on Tuesday.

Announcing the approval at a press conference shortly after the cabinet meeting, Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh said that every Pakistani is eligible to become part of the scheme but public office holders and their dependents will not be able to benefit from it.

The adviser was accompanied by Special Assistant to the Prime Minister on Information Dr Firdous Ashiq Awan, State Minister for Revenue Hammad Azhar and Federal Board of Revenue Chairman Syed Shabbar Zaidi.

The scheme has been announced two days after the government reached an agreement with the International Monetary Fund (IMF) for a $6bn bailout to implement an “ambitious structural reform agenda” over a period of 39 months.

Inviting all such people as have undeclared assets to take benefit from this first amnesty scheme of Pakistan Tehreek-e-Insaf government by June 30, the adviser said it offered them the “last chance” as the government had already imposed the Benami Law under which all benami properties would be confiscated.

Shaikh said the philosophy behind the scheme was to encourage businessmen to participate in the legal economy, adding it did not intend to intimidate people. He said efforts have been made to make the scheme easy to understand and implement.

The finance adviser said all assets were included in the scheme inside or outside Pakistan. All assets other than real estate would have to pay four percent to get these legalised.

In case of real estate, it would be evaluated at 1.5 on FBR value, to bring it to market value, he said, citing an example that if the FBR value of any property was Rs1 million, it would be charged at the value of Rs1.5 million.

He said the Pakistanis abroad could also pay four percent to legalise their undisclosed assets, however added that in terms of cash, they would have to deposit their money in Pakistani banks (in local or foreign currency), otherwise they would have to pay 6 percent to legalize their assets.

FBR Chairman Syed Shabbar Zaidi said government of Pakistan had clear business information about the Pakistanis living abroad and at present it possess information about 150,000 accounts in 28 countries against which the government had started taking action. He urged the media to become partner in this scheme and play role in making this scheme a big success. Minister of State for Revenue Hammad Azhar said there was a lot of difference between the current and previous amnesty schemes as for the first time there was a condition for all asset declarer to become tax filer, besides giving option to all such people to revise their balance sheet in their tax returns.

A tax amnesty is a limited-time opportunity for taxpayers to declare their assets and pay a defined amount in exchange for forgiveness of a tax liability, without fear of criminal prosecution.

The amnesty scheme was first expected to be approved on April 8, but it is said the timeline of the IMF bailout package had complicated its launch.

The scheme could not be approved in two meetings of the federal cabinet last month, before the exit of then finance minister Asad Umar. The decision was deferred after the cabinet failed to evolve consensus with some ministers saying it could pose political and constitutional challenges for the government.

Opposition Reaction

The ruling Pakistan Tehreek-i-Insaf (PTI) had strongly criticised amnesty schemes introduced by previous governments while it was in opposition.

Rejecting the amnesty scheme offered by then prime minister Shahid Khaqan Abbasi in April last year, PTI chief (now PM) Imran Khan had said: “Such schemes are created to benefit the corrupt. Only corrupt elements become the ultimate beneficiaries. This is to fool the honest people of the country and encourage corrupt elements to plunder and amass wealth, only to whitewash it later on.”

In fact, he had gone to the extent of pledging not only to reverse the scheme but also to investigate those benefiting from it, if he was voted to power. He had warned tax evaders not to take advantage of the scheme and come into the tax net; a claim that was considered to be a setback to the success of the scheme.

Following the appointment of Dr Shaikh as Adviser to PM last month, the government had said its proposed amnesty scheme would go ahead without any major change despite a change of command and internal opposition.

The finance adviser desired that it should be a people-friendly scheme which could help in documenting the economy and bring more non-filers into the tax net, instead of just generating funds.

He directed the FBR to fine-tune the scheme to make it simple to understand and easy to implement, an official statement said, adding that the objective of the scheme should be to make the economy more tax-compliant and documented.

Shaikh on IMF talks

Replying to a question, Hafeez Shaikh said talks between Pakistan and International Monetary Fund (IMF) continued for around 7-8 months and nothing special was added in the agreement after he joined the office.

“The IMF is an international institution which primarily focuses on bringing the financially weak countries out of financial crisis and the conditions set by the Fund for Pakistan are in its own interest,” he said.

Whether it was the condition of shrinking trade deficit, or reducing expenditures and increasing revenues, or selling out the bleeding State Own Entities, all such conditions were aimed at stabilizing the country’s economy, he held.

To a question whether this would be the last programme with IMF, the adviser said in the past, the governments could not fulfil the conditions of IMF which resulted in instability of the economy, but this time the government was committed to abide by all the conditions and hoped that the country would not need to go for another programme.

He said the electricity price would be increased for only those consumers who use 300 and above units per month, while the rest of 75 percent consumers would not be affected by the power tariff raises.

He informed that in the upcoming budget the government was raising the budget for the downtrodden segment of the society and allocating Rs180 billion compared to Rs100 billion in the previous year.

The adviser said under the Public Sector Development Programme (PSDP) 2019-20, the government would allocate Rs 550-600 billion while in the next year this budget would be increased to over Rs 700 billion which would help generating more new jobs.

He said the revenue performance had not been so good in the past but now the government was taking some basic measures which would help taking the revenue level to record high in coming years.

Key Points

Scheme could be availed by June 30

It covers all assets inside or outside Pakistan

4pc legalisation fee on all assets other than real estate

Fee on real estate will be 1.5 times of FBR-determined value

Overseas Pakistanis to also pay 4pc fee on cash if they deposit it in Pak banks. Otherwise, fee will be 6pc