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ISLAMABAD: The Islamabad High Court (IHC) issued notices to the Federal Board of Revenue (FBR) and the Attorney General for Pakistan in petitions alleging breach of Tax Amnesty.

Chief Justice Aamir Farooq on Wednesday heard series of seven different petitions alleging breach of Tax Amnesty. The petitioners are Pakistani taxpayers to whom FBR had issued show cause notices demanding recovery of Annual Capital Value Tax on foreign assets.

They have alleged that the FBR has issued them notices in blatant breach of the Tax Amnesty granted by the Government of Pakistan in 2018 and 2019. It has breached Parliament’s promise which was relied upon by taxpayers.

As part of the Amnesty Scheme announced by the Imran Khan regime, taxpayers had been asked to pay a one-time tax equivalent to 4-6 per cent of the total value of foreign assets. In return, they were promised immunity from any further taxation on the same asset value. The Amnesty Scheme was a roaring success and the government earned billions in tax revenue at the time.

Section 12 of the Foreign Assets (Declaration and Repatriation) Act, 2018 and Section 13 of the Assets Declaration Ordinance, 2019 further promised that the wealth declarations may be kept confidential and will not be used against the taxpayers for levying any further taxes. However, three years later, the FBR has allegedly done precisely that. It has used this “classified” information regarding foreign assets to issue demand notices.

The petitioners in their support have annexed an expert opinion by one of the framers of the relevant statutes, Shabbar Zaidi, who was chairman of the FBR. Zaidi has publicly stated the Tax Amnesty laws have been breached by authorities.

After hearing preliminary arguments of counsel Umer Ijaz Gilani, Chief Justice Aamir Farooq was pleased to admit the petitions for hearing. The chief justice was also pleased to suspend the demand notices, subject to submission of bank guarantee.

Besides challenging demand notices, the petitioners have also assailed the constitutionality of the Capital Value Tax (CVT) levied by the federal government on foreign assets. The petitioners contend that after the 18th Amendment, CVT on immoveable property has been devolved to the provinces. The Federal Legislature no longer has the legislative competence to levy any tax on the capital value of immoveable property, be it local or foreign. The court was pleased to seek comments from the Attorney General for Pakistan about the constitutionality of the law.

The case has been adjourned until 12th February.

Copyright Business Recorder, 2023

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