He was talking to media persons at the inaugural session of "Payment of Taxes, including Customs Duty, Income Tax, Sales Tax and FED through Banks'' Alternate Delivery Channels (ADCs), ie, ATM and Online Banking'' here at the FBR House.
Akhtar said the experts talk about generating $100 billion from the proposed assets declaration initiative, which he personally thinks is incorrect. "If US $4-5 billion came from non-resident Pakistanis from the scheme, it would be a big success. The scheme is expected to be announced for a period of 3-6 months."
"If we have not given a clear guarantee to the persons availing the scheme and immunity from all laws of Pakistan, the projected amount would not come. If we do no ensure confidentiality of persons availing the scheme, it would not be a success," he said.
About the rate of tax on which foreign assets are legalized, Haroon Akhtar said that it would be attractive for persons availing the scheme. The rate of tax would be attractive for all categories of businessmen and persons outside Pakistan ie small, medium scale and large sized businesses abroad. It would be a big success of the Pakistani government because besides documentation, the scheme would be able to encourage non-resident Pakistanis to bring their money back to Pakistan.
He also said the government is considering presenting this scheme along with a money bill on the occasion of upcoming budget 2018-19 but nothing has so far been finalized as separate bills could also be introduced to the Parliament. Without full backing of Parliament and developing consensus, this proposed scheme cannot succeed.
"The honorable judges of Supreme Court of Pakistan are reviewing this proposed amnesty scheme and we will take into account their direction. We want to give protection from Anti-Money Laundering (AML), National Accountability Bureau (NAB) and FIA laws but predicate offences like terrorist financing, corruption or drug money will not be protected," the Special Assistant to PM on Revenues said. He said all public office-holders including parliamentarians, bureaucrats, judges and others cannot avail this upcoming scheme. Asked whether Hassan Nawaz and Hussain Nawaz will be allowed to avail this scheme, he said that all public office-holders would be barred for availing this scheme.
Citing the example of Indonesia, he said they kept tax rate at higher side that resulted into bringing back $10 billion despite the fact that their foreign residents possessed foreign assets of $360 billion. "If we give tax incentives or lower tax rate for non-resident persons, it would be key to success of the scheme. Therefore, the tax rates would be very low to give incentive to the non-resident persons to bring their money back to Pakistan."
Now the proposed scheme is becoming a reality as most of the work on it has been done. Earlier, it was decided that the scheme would be announced prior to budget. However, there is a strong thinking that the scheme may be announced in budget through a special bill in the Parliament. If this decision has been taken to introduce the scheme through a special bill, it would help generate a healthy debate on the special bill in the National Assembly as well as Senate. "The decision to bring a bill to the Parliament is yet to be taken," he remarked.
Asked whether domestic assets would also be covered under the scheme, Haroon Akhtar said that no final decision has been taken to bring the undisclosed assets held locally under the scheme. There is a lot of pressure that the scheme should also be announced for domestic assets. "Arguments are going on whether or not to bring the domestic assets under scheme," he said. The Special Assistant to Prime Minister on Revenue said, "We would ensure that the police, FBR, NAB and FIA would not harass the persons intending to avail the scheme. However, drug money, terrorist financing and money from corruption would not be covered under the said scheme."
Talking about the upcoming budget, he said the budget 2018-19 would contain a number of incentives for the business community. A number of incentives, which the government remained unable to give to the business community due to revenue constraints, would be announced in this budget.
Asked about any downward revision in revenue collection target for 2017-18, Akhtar said that revenue collection target of the FBR has not been changed. Tax machinery is trying its level best to achieve the assigned target of Rs 4,013 billion. The realistic revenue collection target for 2018-19 should be Rs 4,450 billion. This is not a final figure, but it is a realistic projection which may be assigned to the tax machinery for 2018-19.
Referring to recent slide in exchange rate where rupee depreciated against US dollar in big way bringing it down to Rs 116 against one US dollar, Akhtar said that it would have inflationary impact but it could benefit the incoming government in the next fiscal year.
To a query on Ishaq Dar, he said, "Dar Sahib is out of the country and he does not have portfolio of federal finance minister." The budget speech would be made by Special Advisor to Prime Minister on Finance Miftah Ismail. "We will follow the legal procedure in this regard," he added.
Asked about pending sales tax refund claims, he said that around Rs 128 billion sales tax refund claims, including deferred claims and Refund Payment Orders (RPOs), are pending. Following approval of the Prime Minister, the FBR will clear Rs 50 billion sales tax refund claims in three installments. The total amount included around Rs 40 billion worth deferred claims and Rs 19 billion worth RPOs. The payment process is expected to be started by the end of current month. In case of income tax, the pending refunds come around Rs 80-90 billion, he added.