Tale of two amnesties

Embarrassments aside, the Assets Declaration Ordinance 2019, commonly referred to as Amnesty Scheme , is one of the better prepared and more comprehensive documents to have come out. For one, the scope of the scheme has been broadened beyond domestic assets, allowing room for documenting and netting the previously undisclosed sales and expenditures, from companies.

Some may argue that the rate of tax on few asset classes is very low, and as pointed out by tax advisors, Tola Associates, the tax rate on immovable property is even lower than the rate on provincial stamp duties. But the argument goes that tax collection for year 1 is not the primary aim of the whole exercise. This will hold ground if this does indeed prove to be the last such scheme, as is being told from the government corners.

The rules of the game will certainly put more clarity on a few burning questions. Some have pointed that the time is too short for the scheme to yield optimal results. Some suggest that in case of undeclared bank accounts, credit entries should be the basis if the value and not the ending balances, as it has been learnt in the ongoing fake account case, that such accounts are mostly used for transaction purposes, with low balances.

A concern in certain quarters has risen from the clause which allows benefit in case of proceedings pending or initiated under the Income Tax Ordinance , except where the matter has attained finality. Clause 11 (e) of the Ordinance prohibits benefit in case of proceedings pending in any court of law. But the “court of law” has been defined as a High Court or the Supreme Court, which effectively means cases with the FIA, or lower courts would not be a hindrance to obtain benefits. That said, even the previous scheme in 2018 also had a similar clause, with a slightly different definition of “court of law”, although that too, had ruled out lower courts, except for the Appellate Tribunal.

Expect the FBR to market the scheme aggressively, as the stick in hand has more teeth this time around, as the Benami Law is well and truly in place unlike the previous time. Banks had it easy the last time, as the government had not enacted the rules, but this time around, those who fail to avail the scheme one last time, could be looking up to jail time or confiscation of (not-so-hard-earned) assets.