ISLAMABAD: The Federal Tax Ombudsman (FTO) has launched investigation of over 12,000 pending cases of aggrieved taxpayers who could not avail amnesty scheme or Assets Declaration Scheme 2019 despite payment of due taxes before the deadline.
(more…)Tag: amnesty scheme
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Immunity under Section 111 is Tax Amnesty
KARACHI: Granting immunity from Section 111 of Income Tax Ordinance, 2001 is an amnesty, senior tax officials at Federal Board of Revenue (FBR) said. This section of the ordinance deals with unexplained income or assets. This section is powerful tool against concealed or black money.
This was made part to the ordinance as deterrence against tax evasion. However, respective governments frequently granted immunity from this section to classes of persons to whiten their ill-gotten money at the cost of genuine taxpayers.
PTI’s ruling government, which was very vocal against amnesty schemes and its chairman and sitting Prime Minister Imran Khan in the past on many occasion vowed to tighten noose around tax evaders instead giving such amnesties.
In contrast the PTI government in its less than two years granted a general amnesty in 2019 and now is going to grant blanked amnesty to construction sector despite realizing it was parking lot for black money.
It is lamentable the ministry of finance late last month issued Medium Term Budget Strategy Paper for year 2020-2023 in which it is clearly written: “Amnesty schemes will no longer be offered, and exemptions will be curtailed.”
Prime Minister Imran Khan on April 03, 2020 announced a package for construction industry and said: “those investing in the construction sector during the year 2020, would not be asked any queries about the source of their income.”
The story not ends here as the government is going beyond and reverting its decision and announced a fixed tax regime for builders and developers. The fixed tax regime is disaster for taxation system and in the last budget the government itself reinstated minimum tax regime in order to realize income tax from true income.
The Medium Term Budget Strategy Paper 2020/2023 also pointed out eliminating the final tax regime. “Gradual phasing out of Final Tax Regime will help in taxing real income,” it added.
Prior to Finance Act, 2019, persons involved in certain transactions were not required to pay tax on their actual income. Instead, the tax collected or deducted on such transactions was treated as their final tax liability.
“Since the tax deducted was final tax, therefore, such persons were not subjected to detailed scrutiny through audit,” according to Income Tax Circular 09 of 2019.
It further said the actual tax potential from such transactions is not realized due to presence of final tax regime.
Tax experts believed that the government was considered only one sector for granting amnesty and allowing immunity from questioning source of income. Granting such amnesty to a particular sector is against fundamental right and may be challenged in the court of law.
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FTO takes Suo moto notice in pending 11,000 tax amnesty cases
KARACHI: Federal Tax Ombudsman (FTO) has taken suo moto notice in 11,000 cases related to tax amnesty scheme for tax year 2018, a tax bar said on Thursday.
The Karachi Tax Bar Association (KTBA) in a notification circulated to its members stated that the office of the FTO had taken a Suo Moto Notice on the inordinate pendency in submission of 11,000 cases of Amnesties for the Tax Year 2018.
The Motion Number is reported as No. 11/2020.
The Suo Moto Notice has been taken on the representation made by the Pakistan Tax Bar Association (PTBA).
A one paged complaint form has been shared to the members in this regard.
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FBR urged to resolve return filing issue of shopkeepers, paid taxes under amnesty
KARACHI: Karachi Tax Bar Association (KTBA) has urged Federal Board of Revenue (FBR) to resolve return filing by shopkeepers and persons paid duty and taxes under amnesty scheme.
The KTBA in a letter on Monday, urged the FBR to resolve the issues of retailers and small traders in filing their returns. Further, those persons are also in difficult state who had paid taxes under amnesty scheme but failed to file their returns.
The KTBA previously submitted it observations on the issues through letters dated September 20 and October 02 and October 30, 2019 with reference to woes of Amnesty Filers and Shopkeepers/Traders in context of Return filing.
The KTBA reiterated that their issues are still unresolved owing to which they cannot file their Tax Returns for TY 2019 despite repeated extensions.
The same are being narrated hereunder briefly to invite your necessary attention yet once again.
The KTBA said that it is critical to decide the fate of filers of the Assets Declaration Scheme of 2019 who could not submit their declarations due to untimely closure of the option on IRIS on July 03, 2019.Consequent to which, they could not revise their wealth statements for the Tax Year 2018, which you would appreciate is a necessary component for filing the return of income and wealth for the next year i.e. Tax Year 2019.
It is apprehended that if they are not allowed to submit their declarations, which they have not been so far, in the last six (06) months, their right to timely file their returns of income for the Tax Year 2019 is systematically been jeopardized and mere extending date of filing wont resolve their problem.
The group of taxpayers consisting of Shopkeepers and Traders of the country who still have to be given, inter alia, a final format of Return for their tax filing, which the FBR introduced vide its notification under Sections 99B and 9C of the Ordinance and committed that the same would be applicable right from the very Tax Year of 2019.
The final notification, however, has not yet been issued by FBR either to confirm or to dispel their confusion owing to which, this large group of taxpayers have not yet been able to file their tax return.
The KTBA said that the instant request should not be treated for further extension in return filing date.
“It is, therefore, all befitting that the System for submitting Amnesty should be opened for those who paid their taxes on July 3rd and the final Notification for Shopkeepers/Traders is issued to enable them file their Tax returns.”
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Amnesty declarants can pay tax at 20pc default surcharge by Dec 31
KARACHI: Persons / companies can avail amnesty scheme 2019 by paying 20 percent default surcharge by December 31, 2019 subject to declaration filed by due date.
Officials at Federal Board of Revenue (FBR) said that the scheme was promulgated through presidential ordinance on May 14, 2019 to allow the non-documented economy’s inclusion in the taxation system and serve the purpose of economic revival and growth by encouraging a tax compliant economy.
The amnesty was granted till on or before June 30, 2019 for a declaration only in respect of any –
(a) undisclosed assets, held in Pakistan and abroad, acquired up to June 30, 2018;
(b) undisclosed sales made up to June 30, 2018;
(c) undisclosed expenditure incurred up to June 30, 2018; or
(d) benami assets acquired or held on or before the date of declaration.
As per the time of payment, the scheme allowed the due date for payment of tax on or before June 30, 2019. However after the due date, the tax shall be paid on or before June 30, 2020 along with default surcharges.
If person fails to pay tax and default surcharge, the declaration made would be void and would be deemed to have never been made under the scheme.
The rate of tax for the amnesty scheme was:
01. All assets except domestic immovable properties at 4 percent
02. Domestic immovable properties at 1.5 percent
03. Foreign liquid assets not repatriated at 6 percent
04. Unexplained expenditure at 4 percent
05. Undisclosed sales at 2 percent.
The rate of default surcharge under the scheme has been set to increase by a default surcharge by amount percentage as specified following:
01. If the tax is paid after the June 30, 2019 and on or before September 30, 2019, the rate of default surcharge shall be 10 percent of the tax amount.
02. If the tax is paid after September 30, 2019 and on or before December 31, 2019, the rate of default surcharge shall be 20 percent of the tax amount.
03. If the tax is paid after December 31, 2019 and on or before March 31, 2020, the rate of default surcharge shall be 30 percent of the tax amount.
04. If the tax is paid after March 31, 2020 and on or before June 30, 2020, the rate of default surcharge shall be 40 percent of the tax amount.
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PTBA asks FBR to allow amnesty declaration filing on already paid tax
LAHORE: Pakistan Tax Bar Association (PTBA) has said that those persons who had made payment for availing tax amnesty scheme but failed to file their returns should be given an opportunity for compliance.
In a letter to Syed Shabbar Zaidi, Chairman, Federal Board of Revenue (FBR) on Friday, the PTBA requested for filing of declaration under Asset Declaration Act, 2019 of persons who made payment of tax prior to deadline.
The PTBA referred to its letter sent to the chairman on September 18, 2019 on the same issue.
The tax bar said that in this regard the desired independent legal opinion was also forwarded as given by Makhdoom Ali Khan, Senior Advocate Supreme Court of Pakistan with the previous letter.
The legal opinion concluded as under:
The FBR should allow the taxpayers to file their declaration after July 03, 2019 considering –
That the scheme of the Act 2019 foresees the possibility of the late filing of declaration.
That the deadline under Section 3 is a directory provision.
That filing late return cannot be penalized if tax has been paid.
And that factually the issue arose due to a technical failure of FBR’s online system.
The FBR’s online portal should be reopened at the very least for filing of declaration of those persons who deposited the tax under the Act 2019 on or before June 03, 2019.
The PTBA said that the taxpayers, who had paid due tax under this Act, should have been allowed to file their declaration as the basic purpose of the said scheme was to facilitate the taxpayers in order to achieve the objective of documentation of economy and revival of taxation system within the country by bringing more and more people into tax net.
“Needless to say that, the taxpayers also cannot be suffer from the technical failure of the FBR system.”
The tax bar once again urged the FBR to allow the taxpayers, who had already paid due tax in this regard, to file their declaration under the Asset Declaration Act, 2019 through their e-portals.
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FBR urged to allow filing amnesty scheme declarations
KARACHI: Federal Board of Revenue (FBR) has been urged to allow those persons to file their declarations who have paid duty and taxes under amnesty scheme 2019 by due date.
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FBR updates exchange rates for late payment by amnesty declarants
ISLAMABAD: Federal Board of Revenue (FBR) on Thursday updated daily exchange rates at Rs158.13 to the dollar for payment of taxes under Asset Declaration Scheme 2019 for those persons, who filed their declarations but failed to pay by due date.
The Asset Declaration Scheme 2019 was announced for around one month and it was expired on June 30, 2019. However, the government extended the date for three more days i.e. July 03, 2019 till the office working hours.
The individuals/companies availed the amnesty scheme by due date were required to pay on the prescribed rates.
The rate of taxes for undisclosed assets, sales or expenditures prescribed within due date as:
01. All assets except domestic immovable properties: 4 percent
02. Domestic immovable properties: 1.5 percent
03. Foreign liquid assets not repatriated: 6 percent
04. unexplained expenditure: 4 percent
05. undisclosed sales: 2 percent
However, the declarants have been allowed to make payment beyond the time limit of the scheme with additional default surcharge at the following rates:
01. If the tax is paid after June 30, 2019 and on or before September 30, 2019: 10 percent of the tax amount
02. If the tax is paid after September 30, 2019 and on or before December 31, 2019: 20 percent of the tax amount
03. If the tax is paid after December 31, 2019 and on or before March 31, 2020: 30 percent of the tax amount
04. If the tax is paid after March 31, 2020 and on or before June 2020: 40 percent of the tax amount.
The FBR is issuing exchange rate for the facilitation of the persons avail and filed their declarations up to July 03, 2019 to make payment with default surcharge.
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Karachi Chamber urges FBR to adjust refunds of previous amnesty’s refunds
KARACHI: President Karachi Chamber of Commerce and Industry (KCCI) Junaid Esmail Makda, while referring to his conversation with Minster of State for Revenue Hammad Azhar and Member IR – FBR Dr. Hamid Ateeq Sarwar during meetings in Islamabad, stated that after listening to the grievances being faced by those individuals whose asset declaration cases were stuck up due to some IT glitches on last day of Amnesty Scheme 2018, the State Minister and Member IR suggested that five percent tax paid against the assets declared by such individuals can be refunded so that they could re-declare their assets in this year’s Asset Declaration Scheme.
In a statement issued on Tuesday, President KCCI pointed out that KCCI received numerous complaints about unprocessed cases of last year’s amnesty scheme in which although the individuals submitted their taxes well in time within the last date of the amnesty scheme but their cases were not processed in FBR’s portal and to date, the fate of all such cases has not be decided.
“KCCI has written numerous letters from time to time so that the issue could be resolved and the policymakers have been assuring to look into this issue but no relief has been provided so far”, he added.
He said that as the government was making all out efforts to make this year’s Asset Declaration Scheme successful, they must look into the possibility of providing relief to such individuals whose cases were not processed in last year’s Amnesty Scheme due to congestion in FBR’s portal or any other IT-related glitch.
Junaid Makda suggested that FBR should come up with a relevant notification in this regard in which they must announce refunds to such cases so that these individuals could quickly avail this year’s amnesty scheme.
He was fairly optimistic that keeping in view the government’s seriousness towards the Ease of Doing Business, the FBR would look into this matter and accordingly announce relief for such individuals as per commitment which would encourage many others to come forward to participate in this year’s Asset Declaration Scheme.
He was of the opinion that although the last date for Asset Declaration Scheme has been extended for three more days but it was not suffice and the government must extend it for at least 30 more days so that maximum number of people could avail this scheme which would prove beneficial for the national exchequer. “The business community remained heavily engaged in identifying budget anomalies, leaving a very little time to examine and look into the possibility of benefitting from Asset Declaration Scheme whose deadline has to be extended”, he added.
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Amnesty scheme extended for three more days
ISLAMABAD: The government has extended the date for tax amnesty scheme for three days on the same day when IMF board meeting to be held to discuss and approve Pakistan loan program.
The Asset Declaration Scheme 2019 has been extended till July 03, this was announced by Advisor to the Prime Minister on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Shaikh at press conference on Sunday.
The advisor said that the scheme has been extended in view of huge interest of people to avail the scheme. He said that the scheme is available till the office hours on July 03, 2019.
Sheikh urged the people to take benefit of the scheme in their own interest as the government had already established the ‘Benami Commission’, which was mandated to go after the Benami properties.
The advisor said under the Benami law, there were heavy penalties and severe punishment for those holding Benami properties.
He said that the asset declaration scheme had provided easy way out to declare the concealed and hidden assets.
The advisor hoped that the International Monetary Fund (IMF) board would approve $6 billion extended fund facility for Pakistan.
He said Pakistan would also get $3.4 billion from the Asian Development Bank (ADB), $2.1 billion of which was expected during the upcoming fiscal year (2019-20) while the country was also hopeful for assistance from the World Bank.
He said since the external loans were provided on low interest rates comparatively, so they were cost-effective and did not create much trouble in repayments.
The advisor enumerated five key areas that had been focus of the budget for the fiscal year 2019-20. Those included overcoming the external threat (current account deficit and trade deficit), taking austerity measures, protecting the vulnerable segments of society, protecting the interest of industrialists to help economic growth and mobilize revenue (Rs 5.5 trillion).
He said the economy was facing crisis situation when the incumbent government took over. It had to face many challenges on external front in terms of current account deficit, trade deficit, and debts to the tune of Rs 31,000 billion, including foreign loans of $100 billion.
In order to overcome the situation, tariff on imports, particularly luxury goods, was increased and same policy was carried out in the upcoming budget, he said, adding resultantly the current account deficit had reduced from $20 billion to $13.5 billion.
He said the current account deficit would further be reduced to $7.5 billion during the upcoming year.The advisor said to overcome the economic challenges, the government mobilized about $9.2 billion in cash from China, Saudi Arabia and the United Arab Emirates.
In addition, the $3.2 billion deferred payments facility agreement was signed with Saudi Arabia for oil imports. An agreement of $3 billion was also signed with Qatar, out of which $500 billion had been transferred.
The government, he said, also took austerity measures to reduce its expenditures.
He clarified that the government had to meet some compulsory expenditures as it had to spend Rs 2.9 trillion on debt repayment while 52 per cent of revenues would be transferred to the provinces under the Constitution while it was also bound to spend for the vulnerable segments.
However, the government still reduced the expenditures by Rs 50 billion and did not increase the pays of government employees (1-16 grade) beyond 10 percent, and that of 17-20 grade employees by 5 percent and no raise for grade 20 and above employees.
Moreover, the allowances of cabinet members had been cut by 10 percent, while the budget for PM House was also reduced.
He said the funding for social protection programmes had been almost doubled from Rs100 billion to Rs191 billion.
The advisor said in order to protect common people, the government had allocated Rs216 billion for providing subsidy to the consumers utilizing up to 300 electricity units while the neglected areas like the erstwhile FATA had been given special heed in the budget with allocation of Rs152 billion for their uplift.
Despite financial difficulties, he said, the Public Sector Development Programme allocations had been enhanced form Rs575 to Rs925 billion and again the projects of neglected areas had been prioritized.
He said the industries would be provided subsidized gas to help industrial growth that would help generate jobs. In addition, the import of around 1650 tariff lines had been zero-rated to make the country’s products compatible in international market, he added.
He, however, clarified that there would be no tax on export-oriented products. If the same products were sold in local market, tax would be implemented.
The advisor said it was matter of satisfaction that the process of democracy was moving ahead. Some 225 National Assembly members had delivered speeches during the budget session and the opposition was given more time as compared to the treasury benches.
He said the finance bill was given proper consideration by the Senate, and its finance committee.
He said the supplementary grants had been reduced to Rs220 billion from Rs600 billion last year, where the excess budget of seven years was also cleared.
Replying to a question, Hammad Azhar said during the year 2019-20, the government would have to pay Rs 2.9 trillion on account of debt servicing while during the previous fiscal year (2018-19), it had retired principal external debt of $10 billion along with interest.
He said the major thrust the budget was that the government had reduced taxes on inputs while increasing taxes on finished luxury goods.