A Lahore-based Tax Lawyer Shahid Jami informed Business Recorder here on Tuesday that comprehensive guidelines should be issued by the FBR in consultation with the tax bars and chambers, etc. The FBR can also regularly issue clarifications, frequently asked questions and guidelines to respond to the queries of the schemes.
On a query, Jami referred to the data claiming that till date only 51 declarations have been filed at Lahore and filing would accelerate once ambiguities and uncertainties are removed.
He said that several mistakes in both the Ordinances regarding foreign and domestic assets and income have been removed through the Finance Bill passed by the National Assembly wherein the provisions of the Ordinances have been incorporated as money bill. However, there are still many ambiguities in both the schemes which ought to be removed either through the mechanism of removal of difficulties by the federal government provided within the schemes or through clarification by the Board.
Shahid Jami stated here are many ambiguities creating uncertainty amongst the taxpayer and the tax advisors on different legal issues of the said schemes. He explained that the scheme regarding the undisclosed domestic assets caters for undisclosed income as well whereas the scheme regarding undisclosed foreign assets is silent regarding the foreign income of the resident Pakistanis. As per him, the undisclosed foreign immovable assets of the resident Pakistanis have been fetching undisclosed rental income which was required to be reported in the Pakistani tax declarations but no coverage to that foreign income has been given.
He explained that section 11(2) of the Foreign Assets (Declaration & Repatriation) Act contains a deeming provision that date of declaration of foreign asset shall be deemed to be the date of acquisition but there is no express mentioned that the declaration of assets would cover the income derived from the asset prior to the date of deemed acquisition.
He stated that there is uncertainty whether such type of foreign income is to be declared in the declaration-form pertaining to domestic assets having column of undisclosed income or the foreign income gets immunity with the assets declaration and is not required to be covered. He stated that the definition and expression of "fair market value" of foreign asset has been unnecessarily brought in when the cost of acquisition is the relevant concept and value as used in case of domestic assets. He explained that scheme pertaining to domestic assets provides that the value of open plots and lands would be the cost of acquisition or the FBR's rate whichever is higher.
He stated that the insertion of definition of "undisclosed asset" in the scheme pertaining to domestic assets to mean an immovable property, value of which has been under-reported. This is contrary to the whole scheme wherein undisclosed assets are to be protected through amnesty. With this amendment, the declared assets at FBR's value have been made vulnerable.
The tax lawyer urged that FBR should regularly issue clarification regarding the frequently asked questions (FAQs). He stated that some of the FAQs have been answered on the FBR's website yet dozens of questions remain unanswered, besides some incomplete or incorrect answers by the FBR.
He gave example of question someone asked whether he is required to declare the bank balance as on April 9, 2018 of the undisclosed bank account or peak balance prior to that. On that, FBR clarified that only the balance is required to be disclosed whereas it should have been clarified that transaction in the bank account ought to be covered in addition to the closing balance. The tax expert pointed out that on the FBR's web portal there is no facility either to revise the declaration or to file another one before the closing date of June 30, 2018 and the software should be modified to cater for the same, Shahid Jami added.