Lawmakers, bureaucrats may not get tax amnesty
By: Mehtab Haider
ISLAMABAD: The Federal Board of Revenue (FBR) is willing to exclude parliamentarians as well as bureaucrats of the federal and provincial governments from the ambit of the upcoming tax amnesty scheme.
The move is said to be a bid to counter criticism that the scheme is a financial ‘National Reconciliation Ordinance’ but whether the Presidency is also out of the ambit is not yet clear.
Earlier, the government had considered inserting a clause into a proposed bill, allowing the parliamentarians and the bureaucrats to benefit from the scheme but later dropped the idea. “If opposition parties raise the ‘financial NRO’ argument, the government will propose barring parliamentarians from benefiting from the scheme,” said official sources.
The bill has already been signed by Finance Minister Hafeez Sheikh and is soon to be tabled before the Parliament. “We have done our work and now the government needs to decide when to table the bill, depending on the prospects of its easy passage,” Asrar Raouf, the FBR Senior Member Inland Revenue Service, told The News.
The draft bill envisages that a violator of the scheme could face suspension of his computerised national identity card (CNIC), placement of his name on the exit control list and the finalization of provisional assessment under the Income Tax Ordinance of 2001 against him.
The draft proposes amendments to the Customs Act, the Sales Tax Act, the Income Tax Ordinance and the Federal Excise Act so as to omit from consideration for amnesty those cases where first information reports (FIRs) have been lodged.
The first amnesty scheme is called the Tax Registration Scheme (TRS-2012) and will apply to undocumented non-filers and to those registered individuals who have not filed their income tax returns for the three preceding years.
The FBR has proposed that those availing TRS 2012 be slotted into three categories, based on information available with the National Database and Registration Authority and the FBR.
A person objecting to the category he is placed in may filean appeal before Inland Revenue, which is supposed to dispose of the same within days of its receipt. This information will also cover details regarding foreign travel and ownership of moveable and immoveable assets.
Those potential taxpayers who sign up for the amnesty in the first month of the launch of the scheme will only be liable to paying Rs40,000 on the declaration of Rs10 million. However, those who wait till the second or third months after the launch of the scheme will be charged Rs50,000 and Rs60,000 respectively on the same amount of money.
The draft bill stipulates that the person availing the TRS can opt for discharging his tax obligations by paying an amount 10 percent higher than the amount paid in the preceding year for the next four years.
The FBR has also proposed an immunity scheme whereby the taxpayer who has availed himself of the amnesty scheme shall not be liable to any further tax, charge, levy, penalty or prosecution under the Income Tax Ordinance other than the tax as may be demanded of him under Section 111 of the scheme.
However, a person benefitting from the amnesty scheme shall be required to pay the amount of registration tax at the designated branch of a scheduled bank after producing his CNIC. The bank shall then issue the taxpayer a receipt and a national tax number.
The second amnesty scheme – the Investment Tax Scheme (ITS-2012) – pertains to undisclosed or unexplained income as well as to moveable/immoveable assets and payment of investment tax.
The proposed ITS shall apply to all taxpayers registered under the Voluntary Tax Registration Scheme. Further, even existing taxpayers can avail themselves of the scheme if the tax paid by them on the basis of income declared for the tax year 2012 is equal to or exceeds the registration tax payable under the TRS.
According to the draft, where the tax on undisclosed income is paid in accordance with the amnesty scheme, the taxpayer’s valuation of his income shall be accepted and he shall be entitled to incorporate such income in his books of accounts. However, no depreciation with respect to buildings, plants and machinery or other assets declared under the scheme shall be admissible for any tax year prior to July 1, 2011.