ISLAMABAD (May 27 2008): The Federal Board of Revenue (FBR) is working on two amnesty schemes for legalisation of the black money and promotion of investment in specific sectors, without asking source of investment. Sources told Business Recorder on Monday that the board is examining the possibility for launching these amnesty schemes for the documentation of the economy and attracting maximum investment.
In this connection, the board is actively working on different proposals with the help of field formations. The FBR may propose a general amnesty scheme for the public to encourage documentation. So far, rate for the legalisation of the undisclosed wealth has not been finalised. It could be around 10-12 percent, but the working on such figures is under the process.
The second scheme is related to the investors having large amount of undocumented money. Under the scheme, they might be allowed to make investment without probing source of such investment, past tax record or business transactions.
Sources said that it depends upon the government to either accept both the schemes or reject them in the upcoming budget. According to the sources, the drafting of amnesty schemes is also a part of government strategy to broaden the tax-base and bring maximum number of persons into the tax net.
When contacted, a tax expert said that the government had announced various tax amnesty schemes in the past. In 1997, an amnesty scheme was notified to pay 7.5 percent of the money for legalisation. Another general amnesty scheme was announced in 2000 for whiting of black money.
There was an option available under the scheme to pay either 10 percent of the money or 2 percent of the undeclared stocks available with the person. In case a person pays two percent of the total stocks, no tax official could probe the source of investment in stocks. Similarly, the people were permitted to pay certain amount of the turnover or sale for legalisation of the undocumented money.
He said that there is strong possibility for launching of new amnesty schemes due to increased investment of black money into the real estate sector. It is astonishing to note that large amount of undocumented money has been invested in purchasing of plots etc.
The government has to restore wealth tax or offer amnesty scheme for legalisation of investment in property, he said. Expert said that there is another kind of amnesty scheme, which is usually sector specific.
For example, if the government announces amnesty scheme for investment in power projects, nobody would ask source of investment in this specific sector. There is shortage of power in the country for which sector-specific amnesty scheme could be launched. Another major advantage of the amnesty scheme is that it will attract black money in the power projects in the country.
Source: Business Recorder, 27/5/2008