Pakistan Tax Amnesty Scheme 2018
On Thursday, Prime Minister of Pakistan Shahid Khaqan Abbasi has announced the tax reforms and onetime tax amnesty scheme. These steps have been taken to increase the tax net as currently only 700,000 people pay taxes. Here is the complete detail of Pakistan Tax Amnesty Scheme 2018.
Who can and can’t avail tax amnesty scheme
Every Pakistani citizen can avail this amnesty scheme. But politically exposed persons and their families are not eligible to benefit it.
Duration of new amnesty scheme
Pakistan Tax Amnesty Scheme 2018 is offered till 31 July 2018.
- 0% payment or source of income required for annual remittance less than $100,000
- 2% payment on foreign cash if brought to Pakistan
- 5% payment on dollar accounts kept abroad
- 3% payment on foreign fixed asset
- 5% payment on all undeclared incomes earned before 30 June 2017 on all local assets (cash, shares, gold, property) to bring into tax net
INCOME TAX REFORMS
- People earning up to 100,000 PKR per month have to pay no income tax
- People earning from 100,000-200,000 PKR per month have to pay 5% income tax
- People earning from 200,000-400,000 PKR per month have to pay 10% income tax
- People earning more than 400,000 PKR per month have to pay 15% income tax
- The higher income tax of 30% will be lowered to 15%
- CNIC Numbers will be made NTN Numbers
PROPERTY TAX REFORMS
- 1% advance tax on property transactions that will be adjusted in annual tax returns
- Current FBR Property Valuation and DC Rates to be abolished on 1st of July 2018
- Federal and Provincial Governments will charge just 1% tax from 1st of July 2018
- Non Filer can’t buy property worth PKR 5 Million or over from 1st July 2018
- FBR would prescribe one-page e-return for Foreign Pakistanis to buy properties in Pakistan.
- People can register property at whatever rate they want
- Government can purchase property at 100% higher rate for fiscal year 2018-19, 75% higher rate for fiscal year 2019-20 and 50% higher rate for fiscal year 2020-21. (Higher rate takeover is to end the under value registration of property. This will end all disputes as people will register property at the current rate. For example a property is worth 4 million. Current registration value is 10 LAC. So according to the new law government can buy back property at 20 LAC. So buyer will bear the loss of 20 LAC. So people will never dare to register property at lower rate than the market value. In other words property registration value will be the same as market value. End of three separate property valuations; Market rate, FBR Rate and DC Rate).
- Best tax reforms in history of Pakistan
- More people will be included in tax net
- Tax payers will get relief
- Property buyers and sellers will pay less money on transactions
- Worst amnesty scheme in history of Pakistan
- Honest tax payers are discouraged by amnesty scheme
- Amnesty scheme will be cause of social unrest in Pakistan
- Bloodbath for luxury property market
FATE OF AMNESTY SCHEME
Dozens of tax amnesty schemes have been offered in the last 70 years but all have failed. This amnesty scheme will be another flop. Recently Lahore High Court has ruled out the Tax Amnesty Scheme of 2013. The applicant also requested to end the unjust culture of tax amnesty schemes. The present amnesty scheme will also be challenged and ruled out as it is against the law to award the tax evaders whereas honest tax payers have paid the higher taxes on their incomes.
Impact of Amnesty Scheme on PAKISTAN REAL ESTATE SECTOR
First of all this amnesty scheme will be ruled out by NAB or SC. Even if this scheme survives it will be a death blow to the high-end or luxury property market. The reason is that non filers will not be allowed to buy property worth PKR 5 million or above. Indeed low price plots will have good demand. But what house we can buy with 49 LAC?
Prices are currently 25% down from peak of 2016. If amnesty scheme is ruled out then property price fall will take some time. But if amnesty scheme is applied then it will totally crash the property market. One way or other things have changed in Pakistan. The honest tax payers are the real winners of every outcome. This tax amnesty scheme will totally block the influx of black money into reality sector.