Federal Board of Revenue (FBR) Thursday clarified that declarants of foreign assets having foreign currency accounts will make tax payments in US dollars and they will request their respective banks to make payments to State Bank of Pakistan (SBP) in US dollars after converting other currencies into US dollars. The FBR said this while responding to a question whether taxpayers/declarants can pay the tax through FCY accounts in currencies other than US dollars.
The FBR responded while tax payments are to be made in US dollars, the declarants having FCY accounts in other currencies will request their respective banks to make the payment to SBP in US dollars. The FBR here on Thursday issued frequently asked questions (FAQs) on procedure for repatriation of liquid assets and deposit of tax under the Foreign Assets (Declaration and Repatriation) Act, 2018.
It was asked whether IBAN of SBP account is in NBP New York, the US. The FBR responded that the IBAN is not used in the USA. Alternatively, ABN number i.e. 026004721 can be used for making payments. Another questioner asked if the SBP would accept payments against the declaration of foreign assets in a case if a declarant remits funds to the SBP by 30th June 2018 but funds are realized in the SBP's account after 30th June 2018.
The FBR responded in the affirmative, saying all payments made/ remitted to SBP on or before 30th June 2018 under the Foreign Assets (Declaration and Repatriation) Act, 2018, will be accepted as payments against the declaration of foreign assets, provided the declarant submits the evidence to SBP that the payment is made on or before 30th June 2018.
Meanwhile, sources told Business Recorder that FBR will devise some viable mechanisms of granting adjustment/credit in the tax returns (tax year 2018) for persons who have filed declarations and paid tax under the Voluntary Declaration of Domestic Assets Act 2018 for the income earned during July 1, 2017 to April 9, 2018.
An official said the scheme is for undisclosed assets and income. However, it would not cover income earned during the period from July 1, 2017 till April 9, 2018. It is because this income would fall in tax year 2018 and income tax return for the tax year 2018 is not due by the commencement date of the said Act or the last date of applicability of the scheme. Therefore, there is no question of this income being undeclared or undisclosed.
The Voluntary Declaration of Domestic Assets Act 2018 is very much clear on the issue and rationale behind such law has not been changed. However, if some persons have filed declarations and paid tax under the Voluntary Declaration of Domestic Assets Act 2018 for the income earned between July 1, 2017 and April 9, 2018, an effective procedure would be chalked out to allow them credit or adjustment of the tax paid pertaining to declaration of income during the said period. This credit or adjustment would be allowed in the income tax returns to be filed by the declarants for tax year 2018. The amount inadvertently paid by some declaration would not be wasted but credit or adjustment would be allowed, sources said.
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