KARACHI: Federation of Pakistan Chamber of Commerce and Industry (FPCCI) has recommended the government to launch an amnesty scheme of asset declaration for cryptocurrencies.
The FPCCI, which is the apex trade body of the country, in a letter to Prime Minister Shahbaz Sharif suggested measures to improve foreign exchange reserves.
It said: “Investments in cryptocurrencies started with speculative gaming but in recent years have grown into humongous sizes. It is imperative for government authorities to first launch a one-time asset declaration scheme and devise a regulatory framework for future transactions.”
Capital gain taxes, similar to stock market investments, should also be introduced which will provide an additional source of tax revenues for the country.
The FPCCI suggested a mechanism for the proposed amnesty scheme, which included:
i. Encashment of cryptocurrencies in Pakistan and converting the foreign exchange into the Pakistani rupee may be allowed with no tax.
ii. Encashment of cryptocurrencies in Pakistan and held as deposits in foreign exchange accounts Pakistan may be allowed with a 5 per cent tax.
iii. Encashment of cryptocurrencies in Pakistan and held as deposits in Roshan Digital accounts may be allowed with 10 per cent tax for non-resident Pakistani nationals/dual nationals.
The apex trade body also advised the government to launch amnesty scheme to deposit dollars in local banks.
It said that Pakistan’s total foreign exchange reserves have been depleting significantly since December 2021.
The liquid forex reserves have reached the lowest level of US$ 17.01 billion in April 2022 since June 2020 (on weekly basis).
The reserves held by SBP are only enough to bear the imports bill for only two more months7. Increasing current account deficit and debt repayments (including repayment of the US$ 2.4 billion loan facility given by China) have eroded reserves significantly.
The government should launch an incentive scheme to channelize dollar holdings from lockers and personal safes into bank accounts.
The government may exempt such deposits from any taxes if these have not been declared earlier in tax returns which will be held in local accounts for at least one year.