KARACHI: Pakistan’s Prime Minister Shahid Khaqan Abbasi on Thursday announced a much-anticipated tax amnesty scheme, clearing the way for the declaration of unreported offshore and locally held assets.
The purpose of the government’s decision to introduce the incentive package is to boost the country’s declining foreign exchange reserves and increase the number of income taxpayers, which currently stands at 1.2 million.
The measures announced by the prime minister included increasing the income tax threshold from Rs 400,000 to Rs 1.2 million per year. “Those who earn Rs 1.2 million to Rs 2.4 million will have to pay 5 percent income tax and those earning between Rs 2.4 million and Rs 4.8 million will be liable to pay 10 percent income tax,” Abbasi announced.
The government will charge 15 percent income tax on those earning more than Rs 4.8 million per year.
The prime minister also announced that the Computerized National Identity Card numbers would be made into National Tax Numbers to monitor the tax transactions of all citizens.
The scheme also allows the declaration of assets parked locally or internationally that have been kept unreported for tax evasion purposes. “People with undeclared incomes earned before June 30, 2017, on assets within the country will be able to bring them in the tax net by paying a 5 percent penalty, while those holding assets abroad will be able to declare them by paying a 2 percent penalty,” said the prime minister.
He also announced that fixed assets could be declared with a 3 percent penalty, adding that the assets would be evaluated at market rate. Foreign liquid assets like cash, securities and bonds held abroad and in local dollar accounts could be declared with a 5 percent penalty, he continued.
Abbasi said that dollar account-holders in Pakistan who purchased the American currency with undeclared funds could also regularize them by paying 2 percent. He noted that the government had also taken measures to allow only tax filers to open foreign currency accounts.
Regarding property reforms, Abbasi announced that citizens would be required to pay a 1 percent presumptive tax on the purchase of any property. He also announced the abolishment of the Federal Board of Revenue tax rate on property from July 1. “Non-filers will not be able to purchase property worth over Rs 4 million from next fiscal year,” he warned.
The amnesty is scheduled to last until June 30.
Reactions
Members of Pakistan’s business community, tax experts and economists termed the scheme a prudent step in the context of the current financial condition of the country.
“We had demanded the implementation of the scheme across the board, but they have excluded politicians. I request all parties not to resist this scheme because it will bring money back into our country,” Federation of Pakistan Chambers of Commerce and Industry President Ghazanfar Bilour told Arab News.
He added that the government should make sure no questions are asked of people who declare their wealth. “No government agency, including the FBR or FIA (Federal Investigation Agency) should be allowed to ask them anything after a passage of time,” he said.
President of Karachi Chamber of Commerce and Industry Muffasar Ata Malik said the government’s move was good for the salaried classes, but described it as a bitter pill for honest taxpayers. “It is a move that gives incentive to those who are involved in tax theft or those who have stashed their assets abroad,” he said, adding: “Despite its downside, however, the scheme is good.”
Former president of the Income Tax Bar Association Abdul Qadir Memon observed that the penalties on the declaration of assets were nominal and could yield the desired results. “Pakistan is not alone,” he said while defending the government’s move. “Many other countries have announced such schemes to bring back offshore assets.”
Senior economist Muzamil Aslam said: “It is a timely move that should produce positive results since it is increasingly becoming difficult to hide such assets abroad.”
Chairman of the Association of Builders and Developers of Pakistan Arif Yousuf Jeewa sounded happy while talking to Arab News. “The government has accepted our proposal of property valuation at market rate, for which we had been clamoring for nearly four years,” he said while calling for the continuation of the scheme.
Pakistan announces tax amnesty to strengthen economy
Pakistan announces tax amnesty to strengthen economy
- Abbasi’s government reduces income tax while allowing the declaration of unreported assets in return for a fixed penalty fee.
- The amnesty is scheduled to last until June 30.
PM Sharif says Saudi business delegation’s visit to benefit Pakistan’s economic future
- The prime minister says the Saudi minister leading the delegation described it as ‘a new era’ for Pakistan
- Pakistan is seeking foreign investment to navigate a path to economic recovery as it seeks another IMF bailout
ISLAMABAD: Prime Minister Shehbaz Sharif expressed confidence on Tuesday the Saudi business delegation’s visit to Pakistan would prove beneficial for his country while applauding his cabinet ministers for playing a constructive role in their dealings with the visiting investors.
The delegation, which comprised representatives of 30-35 Saudi companies, was led by the kingdom’s Saudi Assistant Minister of Investment Ibrahim Al-Mubarak and arrived in Pakistan on Sunday.
Its members held several business-to-business meetings to explore investment opportunities in various economic sectors of the country.
The prime minister said in the opening remarks of the cabinet meeting the delegation was satisfied with its engagements in Pakistan before returning to the kingdom. He particularly mentioned the head of the delegation, saying he praised the performance of Pakistani ministers.
“He said, ‘We are very satisfied and happily returning.’ And he said, ‘I will report that we have seen a new era in Pakistan.’ In this, the commerce minister has a very big role, as does the ministers of petroleum and finance,” the PM told the cabinet meeting.
“It augurs very well for our future,” he added.
The kingdom’s business delegation’s visit to Islamabad followed Saudi Foreign Minister Prince Faisal bin Farhan’s visit to Islamabad last month, when he was briefed by the authorities on various avenues to invest in the country.
Pakistan is trying to navigate a path to economic recovery by securing an International Monetary Fund bailout.
It also needs foreign investment to help fight a chronic balance of payments crisis.
Pakistan expecting investment in port infrastructure by global shipping giant Maersk — minister
- AP Moller-Maersk has a market share of around 20 percent in Pakistan’s containerized import-export activities
- Qaiser Ahmed Sheikh says there is a lot of interest in Pakistan’s port as a global hub for transshipment
KARACHI: Pakistan is expecting investment from a Denmark-based global shipping giant, AP Moller–Maersk (Maersk), in its port terminal and infrastructure, the Pakistani maritime affairs minister said on Tuesday, amid growing global interest in Pakistani ports.
The statement comes more than a week after Maersk Chief Executive Officer Keith Svendsen’s visit to Pakistan, where he met top officials to explore opportunities in Pakistan’s maritime sector.
Maritime Affairs Minister Qaiser Ahmed Sheikh told Arab News the Danish shipping firm was interested in investing in a terminal and port as well as allied infrastructure, including connecting bridges.
“We had very good discussions with them and they had shown eagerness and told us that they will submit proposal in a few days,” he said. “They want to take a terminal. There is some area where there is depth in the sea, where big ships can be anchored.”
Maersk has grown into a leading provider of logistics and supply-chain services across Pakistan. It has around 20 percent market share in Pakistan’s containerized import-export activities, according to Pakistan’s information ministry.
In January, the Danish shipping firm announced new smart logistics and warehouse facilities in China, Norway and Pakistan.
“With a vast network of warehousing and depot facilities across the country, including our flagship logistics hub in Port Qasim, Karachi — a sprawling 27-acre complex encompassing over 650,000 square feet of warehouse space — we ensure unparalleled support to Pakistani exporters and importers,” the shipping company said in a written response to Arab News.
“In total, Maersk now operates over a 1.5 million square feet footprint across 7 cities in Pakistan.”
Sheikh said many companies were interested in investing in the Karachi Port Trust (KPT) despite a limited space available there.
“We have limited space available in KPT and many, including foreign, companies are taking interest in it, particularly in the deep-water areas where water depth is high and we have the location,” he said.
“The point is that there is a lot of interest in Pakistan’s port right now because they are seeing this as a global hub for transshipment and they will also run the feeder vessels in the Gulf from here.”
To a question about a visiting Saudi delegation, the maritime affairs minister said “there are many breakthroughs” during the visit. “They are looking for areas of mutual interest which both sides can benefit from,” he added.
The South Asian nation has already signed an agreement with Abu Dhabi (AD) Ports Group which is investing about $395 million for the development of a container and cargo terminal under a government-to-government (G2G) agreement between the United Arab Emirates and Pakistan.
FBI’s fallen Pakistani agent Kamran Faridi says returning to Pakistan will be ‘dangerous’
- Faridi was recently released from a Florida prison on the condition he would deport himself to Pakistan permanently
- Faridi ran off to Sweden and then to the US in the 1990s after falling out with the law over his links with criminal gangs
KARACHI: Kamran Faridi, a fallen undercover FBI agent from Karachi who was recently released from a Florida prison on the condition he would surrender his American nationality and deport himself to Pakistan permanently, said on Tuesday it would be “dangerous” for him to return to his home country from where he had escaped a life of crime nearly 30 years ago.
Faridi, 60, worked as an informant and agent for the FBI for nearly 15 years and was the architect of the plan to entrap Karachi businessman Jabir Motiwala, arrested by Scotland Yard in London in 2018 on the request of the United States. After years working for the FBI, he was sentenced to 84 months in jail on Dec. 9, 2022, after he refused to testify against Motiwala.
“It will compromise my well-being, it’s going to be difficult,” Faridi told Arab News in a phone interview from Florida, speaking about the prospect of returning to Karachi after nearly 30 years. “It’s going to be dangerous but what choices do I have?”
Faridi, who lives in the US with his American wife, said the judge had reduced one year from his prison sentence on account of a recent law where a first offender gets a two-point sentence reduction.
Good conduct in prison and a verbal agreement with American authorities that he would surrender his nationality and return to Pakistan before August this year further reduced his sentence, Faridi said. Another stipulation of the agreement was that he would not appeal the court’s decision.
VETERAN SPY
Faridi worked for the FBI from 1995 till 2020 and helped the American agency nab several targets associated with transnational terrorist organizations. However, a 25-year relationship with the American agency turned sour in 2020 after Faridi said he refused to testify against Motiwala, allegedly a high-ranking member of the Indian organized crime syndicate D-Company.
Motiwala was arrested in London in August 2018 for conspiring to launder money into the United States and using force to extort funds. Faridi, who played a pivotal role in his arrest, said he later refused to testify against Motiwala after he realized the businessperson had been framed on bogus charges.
Faridi said his FBI colleagues had informed him that FBI was involved in a joint operation with India’s spy agency the Research and Analysis Wing (RAW) to establish a link between Motiwala, the D-Company and Pakistan’s Inter-Services Intelligence (ISI) military spy agency.
Faridi was arrested in London in 2020 after FBI agents intercepted his conversations with Motiwala’s lawyers, revealing his intent to testify in Motiwala’s favor. He was apprehended at the London Heathrow Airport while attempting to enter the UK, intending to testify against the FBI’s actions regarding Motiwala.
Charged with being a threat to his former FBI colleagues, Faridi was swiftly extradited back to the US and jailed.
“It’s a very complex case, the FBI wants to punish me for not testifying against D-Company,” Faridi said.
FROM KARACHI TO ATLANTA
Faridi was a member of the Karachi-based Muttahida Qaumi Movement (MQM) party and subsequently of its rival, the Peoples Student Federation (PSF), in the 1990s. Both groups were widely known to be involved in criminal activities like kidnappings and armed robberies, which Faridi also became linked to. He later went on the run and escaped to Sweden, where he sought asylum almost three decades ago. He was later arrested by authorities after getting into fights with local gangs there, but broke out of prison and managed to escape to the US, where he ran a gas station in Atlanta.
It was there that he came into contact with the Atlanta Police Department after he complained to them about “corrupt” police officers whom Farid said were harassing him. Thus began his work as an informant with Atlanta police, who later introduced him to the FBI. Impressed with his proficiency in the Urdu, Punjabi, Hindi, and Spanish languages, the FBI decided to recruit him as an informant and agent.
“So that’s how I got introduced to FBI and they introduced me to the Drug Enforcement Authority, Immigration and Customs Enforcement, and after 9/11 the Central Intelligence Agency, MI6, French intelligence and many others,” Faridi said.
Faridi said he had paid a “hefty” price for refusing to testify against Motiwala but would now return to Karachi with his wife.
“I was a gangster but I am neither a criminal nor a gangster now,” he said. “I am returning to my city as a normal man.”
Pakistan army says March suicide bombing that killed five Chinese planned in Afghanistan
- Spokesperson says spike in militant attacks in recent months linked to groups operating from Afghanistan
- Taliban government in Kabul denies it allows anti-Pakistan militants to operate from sanctuaries in Afghanistan
ISLAMABAD: Director General (DG) Inter-Services Public Relations (ISPR) Maj-Gen Ahmed Sharif repeated Islamabad’s accusations that militants were launching attacks on Pakistan from Afghanistan and said a recent attack in which five Chinese nationals were killed was also planned in the neighboring country.
A suicide bomber rammed a vehicle into a convoy of Chinese engineers working on a hydropower project at Dasu in the northwestern Khyber Pakhtunkhwa province, killing five Chinese nationals and their Pakistani driver on Mar. 26.
The assault was the third major attack in little over a week on China’s interests in the South Asian nation, where Beijing has invested more than $65 billion in infrastructure projects as part of its wider Belt and Road initiative. It came amid a recent surge in militant violence in the country that the government — without providing evidence — has said mostly involved Afghans. The Taliban government in Kabul denies it allows anti-Pakistan militants to operate from its soil.
“The attack [against the Chinese engineers] was planned in Afghanistan,” the spokesperson of the Pakistan army said at a press conference.
“The explosives-laden vehicle used in the attack was also prepared in Afghanistan and sent to Pakistan. The attacker was also an Afghan national. When the network [that carried out the attack] was exposed, its central characters like Adil Shahbaz, Zahid Qureshi, Nazir Hussain and another one of their companions were arrested.”
However, the DG ISPR said the government was working to strengthen the security of Chinese workers and make it “fool-proof,” saying the attacks on Chinese workers were aimed at undermining Pakistan’s economic interests and its strategic relations with longtime ally Beijing.
Sharif said Pakistan had taken up the issue of militant violence with Afghan authorities, who were unhelpful.
“There is solid evidence of TTP terrorists using Afghan soil to launch attacks in Pakistan,” he added.
The Taliban say Pakistan’s security issues are an internal challenge.
The Mar. 26 bombing followed a Mar. 20 attack on a strategic port used by China in the southwestern province of Balochistan, where Beijing has poured billions of dollars into infrastructure projects, and a Mar. 25 assault on a naval air base, also in the southwest. Both attacks were claimed by the Baloch Liberation Army (BLA), the most prominent of several separatist groups in Balochistan.
Dasu, the site of a major dam, has been attacked in the past, with a bus blast in 2021 killing 13 people, nine Chinese among them, although no group claimed responsibility, like the Mar. 26 bombing.
Pakistan is home to twin insurgencies, one mounted by religiously-motivated militants like the TTP that Islamabad says operate from Afghanistan, and the other by ethnic separatists who seek secession, blaming the government’s inequitable division of natural resources in southwestern Balochistan province.
Pakistan mulls pension reforms as government moves to curtail expenditure ahead of IMF talks
- Muhammad Aurangzeb says IMF delegation to visit Pakistan this month to discuss size, duration of next loan program
- In March this year, media widely reported the finance ministry had shared a pension reform program with the IMF
ISLAMABAD: The Pakistan government said on Tuesday it was vital to reform the country’s pension system, including by raising the retirement age, to mitigate expenditure as Islamabad aims to save the system billions of dollars per year, with a committee formed to propose recommendations.
The belt tightening moves come as Islamabad — which is facing a balance of payment crisis — is in talks with the International Monetary Fund (IMF) to secure a new long-term bailout deal. In the past, Pakistan has faced the challenges of revenue generation and government expenditure and struggled with high levels of debt, a large fiscal deficit and an ongoing need for structural reforms to improve its fiscal sustainability.
Under the last $3 billion bailout, Pakistan implemented several IMF-mandated reforms, such as budget adjustments, increasing interest rates, and higher energy prices. Among expected reforms under a new program are strengthening public finances through gradual fiscal consolidation, broadening the existing tax base and improving tax administration, and debt sustainability, all while protecting the vulnerable.
An IMF mission is expected in Pakistan in the next ten days to discuss a new loan program that the finance minister has said would be “larger and longer.”
“Age is just a number,” Finance Minister Muhammad Aurangzeb said at a press conference in Islamabad, calling for reforms in the pension system and saying pension payments were a “huge liability.”
“Sixty is the new 40. In the [private sector] institution I left before coming here [as finance minister], we raised the retirement age from 60 to 65. These are your most productive years when you have maximum experience.”
He recognized that changes to the service structure could not be carried out overnight but said Pakistan would need to move in this direction to control the pension costs.
Law Minister Azam Nazir Tarar said pension reforms would be held across the board, for which legislation was required.
“A large chunk of yearly revenue is utilized on paying retirement benefits and pensions,” Tarar said at the press conference with Aurangzeb. “Legislation is required for this as civil servants, armed forces, judicial organs, and executive organs are included.”
The law minister said a committee had been formed under the chair of the finance minister to propose recommendations pertaining to pension reforms.
In March this year, Pakistan’s media widely reported that the finance ministry had shared a pension reform program with the IMF to contain growing pension liabilities, with the consolidated federal and provincial pension expenditure projected to increase by over 20 percent from Rs1.252 trillion last year to Rs1.513tn this year.
The reforms scheme shared with the lender reportedly seeks to cut the annual federal pension expense on existing employees by changing the formula for pension calculation, slashing the commutation rate, discouraging early retirement through the imposition of a penalty, restricting the list of beneficiaries of the deceased employees, and ending the current practice of multiple pensions.
In a 2021 report, the State Bank of Pakistan said the federal pension expenditure was increasingly becoming unsustainable:
“When we look at the federal pension bill, there has been a significant rise. Pension bill has increased at a Compounded Annual Growth Rate (CAGR) of almost 14pc during 2012-23.”
According to the bank, overall pension spending as a percentage of total budgeted expenditure for FY20 exceeded the federal and provincial health and education spending and was almost half the level of consolidated development expenditures.
The World Bank in 2020 warned that salary and pension costs in Pakistan would persistently grow and crowd out other public expenditures in the coming years.
