Pakistan to offer taxpayer amnesty on hidden assets
Pakistan is set to introduce a time-limited amnesty allowing taxpayers at home and abroad to regularise any undeclared assets, as part of plans to raise revenue and improve the performance of the economy
15 May 2019
The move follows an agreement with the International Monetary Fund (IMF) to provide some $6bn (£4.6bn) of support to underwrite the amnesty.
According to local media reports, the scheme will be open until 30 June, but will not apply to any individual who has held a government position after 2000.
Taxpayers living in Pakistan can declare undisclosed assets and pay 4% tax before 31 December, while there will be a 1.5% tax on undeclared property. Those living abroad will have to pay 6% in taxes and declare their assets. There are suggestions that wealth that remains undeclared after the deadline would be confiscated and defaulters could also face jail sentences.
Earlier this month the Pakistani authorities and the IMF reached agreement on economic policies that could be supported by a 39-month extended fund arrangement (EFF) for about $6bn.
As part of this, the IMF called on the government to introduce ‘decisive policies and reforms’ to reduce imbalances, improve the business environment, strengthen institutions, increase transparency, and protect social spending.
In a statement, the IMF said: ‘The EFF aims to support the authorities’ ambitious macroeconomic and structural reform agenda during the next three years. This includes improving public finances and reducing public debt through tax policy and administrative reforms to strengthen revenue mobilization and ensure a more equal and transparent distribution of the tax burden.
‘The forthcoming budget for FY2019/20 is a first critical step in the authorities’ fiscal strategy. The budget will aim for a primary deficit of 0.6% of GDP supported by tax policy revenue mobilization measures to eliminate exemptions, curtail special treatments, and improve tax administration.’
Tax collection has always been a challenging task for Pakistan where only 1.4m file annual income tax returns in a country of 200m.