Govt to plug tax loophole for rich
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Loading... - Kumari Nath
- 24 Jun 2022
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The government may change the definition of resident Pakistani to include all those people in the tax net who do not stay in any foreign country for more than six months, after over 4,000 individuals having $2 billion in bank accounts turned out to be non-resident Pakistanis.
The government on Thursday also considered the option of reducing the advance income tax on cellular services from 15% to around 13% and slashing the proposed duties on low-value handsets.
These measures could be made part of the Finance Act 2022 to be presented in the National Assembly next week.
The government could amend the Income Tax Ordinance through the Finance Act 2022 to plug a loophole which is often exploited by the rich Pakistanis to avoid tax payment, according to sources in the Federal Board of Revenue (FBR).
The FBR had also proposed to change the definition through the Finance Bill but it created more confusion, as the proposed change would have resulted in taxing the income of millions of Pakistani labourers working in the Middle East.
Now, it may further amend the definition to broaden the scope to cover only the rich persons by stating in the law that a person for tax purposes will be considered non-resident only if he or she is present in any other country for more than 183 days in a tax year.
It will be the fourth time in as many years that the FBR has tried to plug the loophole but every time it has created a mess.
In 2019, it amended the law and stated that a person will be treated as resident Pakistani and will be liable to pay income tax, if he stays in Pakistan for a minimum of
four months.
Prior to the Finance Act 2019, an individual was treated as a “resident individual” if the person was present in Pakistan for a period of 183 days (over six months) or more in a
tax year.
Then it brought an amendment last year to delete a clause that had been retrospectively applied to calculate 183 days but the FBR again failed to get the desired results.
During the past few years, the Pakistan Muslim League-Nawaz (PML-N) and the Pakistan Tehreek-e-Insaf (PTI) governments brought substantial changes to the Income Tax Ordinance 2001 aimed at improving tax recovery from abroad. But so far these changes have not translated into revenues due to the capacity and implementation issues.
Pakistan has so far received information about $35 billion from the Organisation for Economic Cooperation and Development (OECD) but the information about nearly $30 billion turned out to be not actionable. Read More…
