ISLAMABAD: Prime Minister (PM) Shahid Khaqan Abbasi on Thursday announced a reduction in the income tax percentage. The move is primarily aimed at clamping down on tax evaders in an effort to bring more people into the tax net.
Addressing a press conference in the federal capital after a meeting of the Economic Advisory Council (EAC) that ended earlier on Thursday, the prime minister said that a decision had been taken to introduce a five-point amendments package on income tax.
“The amnesty scheme has been introduced to bring citizens into the tax net,” he said.
During the meeting, the prime minister noted that only 1.2 million Pakistanis filed income tax returns. He said that out of 1.2 million Pakistanis, only 700,000 were real taxpayers, while the remaining only filed returns but failed to pay any income tax.
“Around 90 per cent people who pay their taxes include those whose tax is deducted at source,” PM Abbasi said. Elaborating further, he said, “Only a meagre 0.7 million people paid their taxes last year because they were mostly salaried employees.”
On the occasion, he announced a tax amnesty scheme for nonpayers, however, he clarified that politically exposed persons (PEPs) and their families were not eligible to benefit from the scheme. The amnesty scheme would be valid until June 30.
“All those who avail this amnesty scheme would receive a one-time exemption from accountability and other laws,” the prime minister declared.
While presenting his package, he said that expanding the tax net was an efficient way to enhance the government’s revenue collection efforts. He also said that soon the Computerised National Identity Card (CNIC) number would be used as the National Tax Number (NTN). “People would now have the option to use their CNIC number to file taxes by filling a simple form,” he informed.
PM Abbasi further said that it was not fair that the rich people were not paying their taxes due to which the burden was falling on the shoulders of the poor citizens.
“In a truly organised country, the people belonging to the higher income bracket pay more taxes while the ones in the lower income bracket pay lower taxes. Disruption of this process means that those citizens who already pay taxes have to carry the burden of more indirect taxes,” he added.
Discussing the tax percentages on different income tiers, Abbasi said that income up to Rs0.1million per month would not be taxed. He said that 10 per cent tax would be levied on annual income between Rs2.4 million to Rs4.8 million, adding that the annual income above Rs48 million would be taxed at a 15 per cent rate.
The premier further said that undeclared assets inside Pakistan and abroad also fell under the amnesty scheme, while adding that an offshore company was an asset and had to be declared as such.
He said that per the provisions of the new amnesty package, cash assets abroad could be brought back by paying a two per cent penalty. Meanwhile, assets falling into other categories would be liable to pay a three per cent penalty, he added.
He also informed that foreign currency accounts would be covered by the amnesty scheme on payment of a five per cent penalty.
Moreover, while elaborating further on another provision of the scheme, the prime minister said that any citizen who purchased a property would be liable to pay a one per cent presumptive tax that would be adjusted in their annual taxes.
Regarding sale and purchase of properties, the prime minister said “In order to tackle the problem of under-invoicing in property sale and purchase deeds, the government now has the right to buy a citizen’s property by making 100 per cent payment over its declared price,” the PM stressed.
He also said that under the new mechanism, the government had the right to monitor all financial transactions of citizens in order to identify tax evaders. Non-tax filers would be issued notices by the government asking the defaulters to provide details about their financial situation, he added.
He said that per his calculations, this new scheme would find around 30 million new taxpayers in Pakistan which would lessen the burden on existing taxpayers to a great extent.
Talking to reporters after the meeting, the premier could not justify why the government was introducing such scheme at a time when it was going to complete its term after next 55 days. He said since the ruling party enjoyed the public mandate, it could do lawful things even on the last day of its government.
He also failed to justify how such a scheme could be launched without first holding a debate in this connection in the parliament.
Abbasi said that he would hold another joint press conference with the Federal Adviser on Finance, Revenue and Economic Affairs Miftah Ismail and share the statistics in the coming days.
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