Tax amnesty to regularize undeclared assets approved by Pakistan cabinet

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Special assistant to Prime Minister on Information and Broadcasting Dr Firdous Ashiq Awan (Center) briefing the media persons about the decisions taken in the Federal Cabinet meeting along with Hammad Azhar Minister of State for Revenue and Syed Shabbar Zaidi Chairman FBR on May 15, 2019 – (Photo PID)
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Prime Minister Imran Khan chairs meeting of the federal cabinet at the Prime Minister house on May 14, 2019. (Credit: PID)
Updated 15 May 2019

Tax amnesty to regularize undeclared assets approved by Pakistan cabinet

  • Only a million people out of a population of more than 208 million pay income tax in Pakistan
  • Recently signed IMF bailout plan requires government to squeeze around $5 billion in extra taxes

ISLAMABAD: Pakistan’s government on Tuesday announced a new tax amnesty scheme aimed at broadening the government’s revenue base in a country where only about 1 percent of the adult population are taxpayers.

The amnesty scheme will last until June 30 and is due to take effect before the annual budget is announced this month. The scheme will allow all Pakistani citizens, except public office holders and their spouses, who have hidden assets to declare them by paying 4 percent tax on domestic and 6 percent tax on offshore assets.

“This scheme’s basic purpose is not to generate revenue … it is for documentation of the economy and bringing dead assets into the economy to make them functional,” Dr Abdul hafeez Shaikh, the prime minister’s advisor on finance, said at a press conference here.

Pakistan’s $300 billion economy faces a ballooning current account deficit and dwindling foreign exchange reserves due to rising imports, low revenue collection and loss making state owned enterprises.

On Sunday, Pakistan reached an accord with the International Monetary Fund for a three-year, $6 billion bailout package aimed at shoring up fragile public finances and strengthening a slowing economy.

The program envisages reforms to improve public finances and cut public debt, including “revenue mobilization measures to eliminate exemptions, curtail special treatments, and improve tax administration,” the IMF statement said.

“We have tried to make this [amnesty] scheme very easy to understand and implement,” Shaikh said, saying people should not be frightened by the schele but encouraged to become part of the legal economy.

“This is the last chance for Pakistanis to benefit from the scheme,” he said, hinting a crackdown against those who failed to declare their hidden domestic and offshore assets. “If an asset has not been declared, then it can be confiscated and the person can go to jail.”

One of the world’s lowest tax collection rates partly help explain the shoddy state of Pakistan’s hospitals and schools, and why the illiteracy rate hovers above 40 percent in the mainly Muslim nation of 208 million people.

PM Khan, who took power in August, has vowed to double tax collection by reforming the Federal Bureau of Revenue, institution responsible for tax collection. One of Khan’s first acts as premier was to replace the FBR chief. This month, he once again changed the FBR chief, unhappy with collection numbers.

Pakistan’s history is littered with statements by incoming governments announcing crackdowns and pledging tax reforms that fizzle out because of a lack of political will to force the rich and powerful to pay taxes.

British Airways to resume Pakistan flights next week after a decade

Updated 23 May 2019

British Airways to resume Pakistan flights next week after a decade

  • BA halted service to Pakistan in the wake of the 2008 Marriott Hotel bombing in Islamabad
  • BA will begin the London Heathrow-Islamabad service with the Boeing 787 Dreamliner

ISLAMABAD: British Airways will resume flights to Pakistan next week a decade after it suspended operations following a major hotel bombing, becoming the first Western airline to restart flights to the South Asian country.

BA halted service to Pakistan in the wake of the 2008 Marriott Hotel bombing in the capital Islamabad that took place during a period of devastating Islamist militant violence in Pakistan.

Security has since improved, with militant attacks sharply down in the mainly Muslim country of 208 million people, reviving Pakistan as a destination for tourist and investors.

“The final touches are coming together for the airline’s return ahead of the first flight on Sunday June 2,” British Airways said in a statement. It will launch a three-per-week service to London Heathrow, it said.

“We’re on board,” Pakistani Civil Aviation spokeswoman Farah Hussain said about the flights resumption.

BA, which is owned by Spanish-registered IAG, will begin the London Heathrow-Islamabad service with the airline’s newest long-haul aircraft, the Boeing 787 Dreamliner.

At present, only loss-making national carrier Pakistan International Airlines (PIA) flies directly from Pakistan to Britain, but its ageing fleet of planes is a frequent source of complaints by passengers.

Middle Eastern carriers Qatar Airways, Etihad Airways and Emirates have a strong presence in Pakistan and have been eating into PIA’s dwindling market share. Turkish Airlines also lays on a regular service to Pakistan.

Islamabad has been running international advertising campaigns to rejuvenate its tourism sector, which was wiped out by Islamist violence that destabilised the country following the Sept. 11, 2001 attacks in the United States and the U.S.-led war in Afghanistan.

“We hope customers in both the UK and Pakistan will enjoy the classically British service we offer, with thoughtful bespoke touches,” Andrew Brem, Chief Commercial Officer at British Airways, said in BA’s statement.

BA said there will be a halal meal option in every cabin and the airline would also ensure sauces in every meal do not contain alcohol or pork.