Prime Minister Nawaz Sharif on Friday launched the Voluntary Tax Compliance Scheme, his second tax amnesty scheme in as many years, which will also allow taxpayers to legalise their black money by paying a nominal 1% tax.
“I am very happy at the peaceful resolution of withholding tax issue being faced by traders and businessmen. We have successfully addressed the burning issue of tax with mutual agreement,” the premier said while addressing a gathering at the launch ceremony of the scheme in the federal capital.
The prime minister hoped that such positive attitude in resolving issues will usher an era of success in every sector of the country’s economy. “Our economy is moving from stable to vibrant as a result of the government’s prudent policies,” he added.
While PM Nawaz claimed that his government was not perturbed by the challenges being faced by the country, he said the government will address all the issues with wisdom. “We have taken up the challenges and are doing well on the fronts of health, counter-terrorism and energy production,” he said.
The prime minister told the gathering that he had directed Finance Minister Ishaq Dar to reduce tax rates, enabling everyone to pay their taxes. “We have concluded the withholding tax issue at the advent of the new year which is a very positive sign.”
Finance Minister Ishaq Dar, Special Assistant to Prime Minister on Revenues Haroon Akhtar Khan and others were also present on the occasion.
The amnesty scheme has been designed for non-filers of income tax returns as well as those who file the returns but underreport the income to evade taxes, showed the draft of the Income Tax (First Amendment) Bill 2016.
The draft indicates the government will not be able to get maximum benefits, as it is offering incentives without proposing penalties on those who will opt to stay out of the tax net.
However, it has restricted the scheme to only the income from business while excluding earnings from profit on debt, dividends and property income.
Contrary to parliamentary norms, the government has kept the option open through the bill that it could amend the scheme without consulting parliament.
At present, less than 1 million people file income tax returns and the Federal Board of Revenue hopes the new scheme will add at least 1 million more people.
In November 2013, Prime Minister Sharif had also offered industrialists an amnesty scheme to legalise their black money up to Rs10 million in the name of increasing investment and broadening the tax base. However, neither the tax base expanded nor the investment picked up.
