Islamabad: Earlier this month, FBR (Federal Board of Revenue) has notified and informed the rules for Asset Declaration Scheme. This is the first amnesty scheme by the current government that is geared towards whitening assets.
Yesterday i.e. on May 20th, 2019, a four-page document termed as ‘Assets Declaration (Procedure and Conditions) Rules 2019’ has been released. It is released to seek some suggestions as well as reservations of every stakeholder before May 22nd, 2019, after the mentioned date, the rules will be finalized and cannot be changed.
There are four categories that are defining the rules namely, manner category, conditions category, payment of tax under other laws category and the revision of declaration category.
In the stance of whitening undisclosed assets and the expenditures, the declarant must file his or her income tax return along with wealth or financial statement for the taxation year 2018 (as existed on June 30th of the same year). By implementing this condition, the applicant who would not be able to file their tax returns for the mentioned year will not be considered.
For the proper implementation of the rules, it is obligatory to value the foreign assets and declaration of the value in foreign currency along with all the applicable taxes and the default surcharges that are required to be paid under the same arrangement.
This scheme can be availed by all the companies, individuals and associations of persons without any hindrance for the sole purpose of whitening their assets, their expenditures and the sales.
Except the real estate, all the assets that are placed within the parameters of the country as well as abroad can be whitened at a rate of four percent of their actual individual value. Once it is properly regularized, it will be mandatory then to keep the cash assets within the bounds of Pakistani bank accounts only. There is the flexibility that if they intend to keep their whitened money abroad, then a rate of 6% will be applicable to it.
When it comes to the declaration of real estate, the actual value of the property will be fixed at a rate of 150% of its FBR value, just to bring it to the par with the market rate. At the areas where FBR rates will not be applicable, the valuation of the property will be calculated at 150% of its DC value. In the same way, the valuation of a piece of real estate would be considered nearly 150pc of its DC valuation in this stance where the FBR value cannot be notified or is less than the DC rate.
As per the current scheme, the declarants have to enhance the publicized value of the immovable property. With 1.5pc tax rate, whitening of domestic real estate can be possible.
When it comes to a foreign real estate asset, the fair market value has to be determined at the exchange rate on the date of declaration.