> New financial year round the corner
•By NP finance correspondent
ISLAMABAD: Prime Minister Shahid Khaqan Abbasi on Thursday announced a tax amnesty scheme purportedly to broaden the government’s revenue base.
Announcing that all 120 million national identity card holders will be assigned tax numbers, Abbasi told a news conference in Islamabad: “If you don´t pay taxes, Pakistan will not be sustainable.”
He explained that politically exposed persons (PEPs) and their families were not eligible for the scheme — valid till June 30. “Under the amnesty plan, all Pakistanis will be able to declare their unreported income and assets and bring their money into the tax base after paying a 5 percent one-off penalty,” Abbasi said. “This is some 2-1/2 months’ time you have to benefit from, after which you will have to face the law,” the prime minister said.
Here’s what the amnesty scheme looks like:
- Tax exemption for monthly income up to Rs0.1m
- 10% tax on annual income between Rs2.4-4.8m
- 15% tax on annual income above Rs4.8m
- Tax exemption for annual income of Rs1.2m
- 5% tax on annual income between Rs.1.2-2.4m
- CNIC to be used as income tax number
- Cash assets abroad can be brought back on payment of 2% penalty
The prime minister explained that citizens’ Computerized National Identity Card (CNIC) number would be used as the National Tax Number (NTN). Once the amnesty period expires, Pakistani authorities will use technology to identify and catch tax evaders.
Discussing the tax percentages on different income tiers, Abbasi said that income up to Rs 0.1million per month will not be taxed. A ten percent tax will be levied on annual income between Rs2.4-4.8mn. And annual income above Rs48million will be taxed at a 15-percent rate.
He said Pakistanis living overseas and declaring cash assets would pay a two percent one-time penalty. The premier added that off-shore company is an asset and it must be declared. Those bringing back their assets will not face further scrutiny or levy, whereas the scheme will also be applicable to those keeping but not declaring their domestic assets.
A widened current account deficit has prompted analysts to suggest the country may need an International Monetary Fund bailout in the next 12 months.
Abbasi said he was aware of the challenges. “We have been in a growth phase. There are current account challenges. We are tackling that,” he said. Abbasi said he would call another press conference with Federal Adviser on Finance, Revenue and Economic Affairs Miftah Ismail and present statistics in the next few days.
