Abb Takk News

President Signs Ordinance For Tax Amnesty Scheme

Islamabad (April 08, 2018): President Mamnoon Hussain on Sunday approved an ordinance bringing into effect a tax amnesty scheme announced by the government earlier this week.

Earlier on April 5, the Prime Minister Shahid Khaqan Abbasi had announced the amnesty scheme for those who are not paying income tax amid to increase tax base and revenue.Addressing a press conference in the federal capital after a meeting of the Economic Advisory Council, the PM said a decision had been taken to introduce a five-point amendments package on income tax.

Five-point tax reforms package:

1-CNIC  number to become NTN tax number.

2-Reduction of income tax rates:

Tax exemption on annual income up to Rs1.2m

5% tax on annual income between Rs1.2 and Rs2.4mn

10% tax on annual income between Rs2.4 and 4.8mn

15% tax on annual income above Rs4.8mn

3-One-time tax amnesty scheme:

Citizens can declare previously undeclared:

Local liquid assets at 5% penalty.

Foreign cash assets at 2% penalty.

Assets/fixed property abroad at 3%.

Dollar accounts can be declared and kept abroad at 5% penalty.

4-Property sector tax reform:

The government says most tax evasion occurs in real estate transactions. There are huge gaps in property values and the amounts at which they are registered, said the prime minister.

1% Advance Income tax on all property transactions.

Advance tax to be adjusted in income tax liability.

Federal govt to recommend maximum 1% local, provincial taxes.

Govt can buy property by paying 100% above declared value

5-Monitoring of taxpayers:

Govt to monitor financial records of citizens and issue notices if it finds tax evasion. Parliament to decide penalties.

The PM said that the lower number of tax payers were causing problems, therefore the amnesty scheme was an effort to increase tax collection.

Click Play Button To Watch This Video

“The overseas Pakistani will only pay two percent penalty under amnesty scheme,” he said adding that the people who had foreign currency accounts can only pay five percent tax.

He also mentioned that the people who generate monthly income upto one hundred thousand will be exempted from tax.

He announced a tax amnesty scheme for nonpayers, however, clarified that politically exposed persons and their families were not eligible to benefit from the scheme. The amnesty scheme is valid till June 30.The prime minister said that the Computerized National Identity Card (CNIC) number will be used as the income tax number in the future. He stated that income up to Rs0.1million per month will not be taxed.

Abbasi further said that those earning over Rs48million annually will be liable to pay 15 percent tax on their income. He added that cash assets abroad could be brought back by paying a two-percent penalty.

“Income tax has been reduced to make tax payment more sustainable,” he said. “At the moment, the [maximum income] tax percentage stands at about 30 per cent. However, after much discussion, we have decided to bring that percentage down drastically,” the prime minister said.

“People who make less than Rs100,000 [a month; Rs1.2 million a year] will now be exempt from paying taxes. People who make between Rs1.2m to Rs2.4m will be liable to pay five per cent in income tax,” he explained.

The income tax for the Rs2.4-Rs4.8m bracket will be 10pc. PM Abbasi added: “Those earning over Rs4.8m annually will be liable to pay 15 percent tax on their income.”

“The third point in these reforms is that we are introducing a tax amnesty scheme through which people with assets within the country will be able to bring them within the tax net by simply paying a five per cent penalty,” the prime minister said.He added that people who hold undocumented assets outside the country will be able to bring their money back to the country by paying a 2pc penalty.

“People who take part in the amnesty scheme will be given a one-time exemption from accountability and other laws,” the prime minister explained. However, he stressed that politically exposed persons and their families will not be able to avail the amnesty scheme.

Moving on to point four, the prime minister said: “On any property that a citizen purchases, they will have to pay a two per cent ‘pre-emptive tax’. That tax will be adjusted in their annual taxes.”“To avoid under-invoicing [in property sale and purchase deeds], the government now holds the right to buy any property that a citizen holds by paying 100 per cent over its declared price,” he warned.

“Lastly, the government will be able to now monitor all financial transactions that citizens make so that they do not evade tax,” the prime minister said, explaining that the government is able to monitor all financial transactions and will send notices to non tax-paying citizens and tell them to explain their financial situation.

“We do not want to send the police to anyone’s home or alert the Federal Board of Revenue, but our citizens need to be responsible and pay their taxes,” PM Abbasi stated.

Related News:

PM Announces Tax Amnesty Scheme To Increase Tax Revenue

PM Asks Amnesty Scheme Critics To Unveil Tax Details