*ISLAMABAD: *An April 5, 2017 assessment of the chartered accountancy firm,A F Ferguson, showed that Pakistanis hold about $150 billion worth ofassets abroad.
Those included $40 billion investments in the real estate, $40 billion inbank balance and foreign securities; $20 billion investments in Pakistanicompanies’ shares and $50 billion worth assets were of miscellaneous nature.
Nearly $6 billion worth of foreign assets – hardly 4% of the estimatedwealth hidden abroad – have so far been declared under the offshore taxamnesty scheme, with Pakistanis repatriating a paltry sum of less than $30million.
“Initial figures for the period of April 10 to June 30 show that Pakistanishave paid $290 million in taxes on nearly $6 billion of declared assets,”said sources in the State Bank of Pakistan.
They said the liquid assets that were transferred to Pakistan were around$30 million – even less than 1% of the conservative estimates of $3 billion.
The caretaker government has already given one-month extension in thescheme till July 31 that may improve the situation provided the taxmachinery and the central bank wholeheartedly back the scheme and removeall the bottlenecks.
The initial results for the first phase of the offshore amnesty schemeindicates that the FBR was the beneficiary that made a claim of over Rs35billion ($290 million) of one-off taxes paid under the offshore scheme.This was despite the fact that the FBR created hurdles in the way of thescheme instead of playing a role of a facilitator.
So far, about Rs2.5 trillion worth of assets have been declared under thedomestic and offshore tax amnesty schemes and at least Rs75 billion taxeswere paid, excluding the Payment Slip IDs. The results of the offshore taxamnesty scheme showed that majority of the assets were declared under thedomestic amnesty scheme.
The expectations for repatriations of these assets were never high from thebeginning but no one would have expected that only $26 million, to beprecise, will be repatriated.
In its presentation to the then government, the chartered accountancy firmhad cautioned that expectations that whole or a major part of foreignassets, if declared, would be repatriated was wrong. Even if 2% to 3% thatcame to $3 billion to $4.5 billion was actually repatriated that would be asuccess, according to it.
However, mere $26 million repatriation was not a success by any standards.Tax and legal experts who have been engaged by their clients blame the FBRand the SBP for the poor show.
“Delay in finalisating the rules for investments in the dollar-denominatedamnesty bonds and non-issuance of rules for repatriation of investment inforeign securities till today were the key reasons behind negligiblerepatriation of foreign assets to Pakistan,” said Shabbar Zaidi, seniorpartner of A F Ferguson.
He said that $60 billion offshore assets out of $150 billion remainedoutside the scope of the scheme due to non-issuance of foreignsecurities-related investment rules.
But a senior official of the central bank said it was the responsibility ofthe federal government to frame and approve those rules.
“The SBP cannot be blamed for the delay caused by the FBR or the financeministry,” he added.
The central bank official said another reason for the poor response wasthat the authorities concerned could not convince people that it was ‘thelast opportunity’ for those who have kept their assets hidden abroad.