By Sajid ChaudhryISLAMABAD: Any adverse change in the tax laws governing remittances would badly affect their inflows, which are the most reliable source of foreign exchange availability to the country, a senior official at Ministry of Finance (MoF) told Daily Times on Monday.
The government has set a target of remittances $6.2 billion for the current fiscal year 2007-08 and an increase of 20.1 percent in the first nine months of the current fiscal year suggests that the remittances target is most likely to be achieved. Workers’ remittances amounted to $602.2 million in March 2008, up by 15.7 percent over the corresponding month of last year as well as the highest ever-monthly inflows. According to the official sources the tax authorities are of the view that amnesty granted to foreign remittances under section 111(4) of the Income Tax Ordinance 2001 is causing huge revenue loss and loophole in the tax collection system. This section gives protection to the genuine foreign income earned and subsequently sent to Pakistan through normal banking channel.
The tax authorities feel that on the other hand, the black money earned in Pakistan is send abroad through ‘Hundi system’. Later, the money is transferred back to Pakistan through normal banking channel. Technically, it is a foreign investment and the department is not legally empowered to make concealment cases against the persons involved in this practice under the Income Tax Ordinance 2001.
Source: Daily Times, 22/4/2008