Pak to regularise undeclared assets in offshore companies

In a bid to regularise undeclared assets in offshore companies, Pakistan is working on a package which may propose 15 per cent tax with no penalty to allow whitening of wealth stashed abroad.
The package, to be announced in August, will be finalised and implemented by the Federal Board of Revenue, Securities and Exchange Commission of Pakistan (SECP) and State Bank of Pakistan, officials told Dawn newspaper.
The Tax Reforms Commission has proposed 15 per cent tax with no penalty to allow whitening of undeclared foreign assets. The Commission had been developing the plan much before the Panama Papers leak hit the headlines.

"We have been asked to come up with a plan to regularise offshore and undeclared holdings of potential taxpayers," a tax official said.
The statutory period under the income tax law will only extend to five to six years back.
He said the proposed package included introduction of two laws for declaration of foreign assets and control of foreign exchange.

One law will provide legal cover to the people who have not declared their overseas income and assets.
At present, there is no law which binds a person to declare foreign assets.
Under the proposed law, assets of equivalent value in Pakistan would be forfeited if assets held outside the country were not declared in addition to other severe penalties.

The other law proposes an amendment to the Foreign Exchange Regulation Act (FERA) to get hold of black money kept abroad.
Under a new section proposed to be inserted in FERA, equivalent of property in Pakistan can be seized by following a prescribed procedure if a person holds foreign exchange, foreign security or any immovable property outside the country.
The amendment was proposed to get hold of a person who is keeping assets in a tax haven in violation of FERA.
The power of seizure under FERA is in addition to the penal action under the Income Tax Ordinance, 2001.

The FBR will take measures to arrest the outflow of untaxed money and assets from the country.
The measures will include a close coordination with the State Bank of Pakistan and monitoring of outflow.
The SECP has also proposed certain steps to improve the reporting mechanism for the companies while declaring their foreign assets.