Tax Amnesties in Pakistan: The first ever and one of the more successful tax amnesty schemes in Pakistan was launched during Ayub Khan’s era in 1958. It resulted in a collection of approximately PKR 1.12 billion which equaled to US $ 0.24 billion approximately and around 71,289 people came within the tax net by making declarations. General Yahya Khan also launched a tax amnesty scheme in 1969 but ended up adding only 19,600 taxpayers with declared assets of just PKR 920 million. Zulfiqar Ali Bhutto’s tax amnesty in 1976 saw the number of people declaring assets decline drastically with assets worth only PKR 270 million declared. The scheme by General Zia’s government was a disaster. The PMLN government’s tax amnesty scheme in 1997 could add assets of PKR 141 million only.
In 2000 General Musharraf’s amnesty resulted in assets declaration of $3 billion approximately and has been the most successful one in terms of revenue collection. Prior to this, in the three tax amnesty schemes by PML- government, only 128 people declared their assets. Later on, PMLN’s 2016 tax amnesty saw just 10,000 declarations and a meager PKR 0.85 billion declared. However, the 2018 amnesty by PMLN was able to garner closer to a $ 1 billion but didn’t result in any significant change in the tax compliance culture. This shows that the disease of tax evasion and the curse of black money has been engulfing Pakistan since its early years.
Recently, there has been a lot of hue and cry over the Assets Declaration Ordinance, 2019 by the Pakistan Tehreek-e-Insaf Government that is commonly referred to as the “Amnesty Scheme”. The opposition has termed this as an opportunity for the near and dear ones of the Government to whiten their “black monies” which is factually incorrect as the political office holders and those related to them are barred from this scheme. Similarly, the opposition is also claiming it to be a copy of the amnesty scheme introduced by PMLN. As a result of these accusations, there is a lot of confusion as to what exactly is this scheme, is it any different from the last one by PMLN Government and whether it can help the stated objective of helping in the widening of the tax base. Let us briefly examine these questions in this write-up in an objective manner.

Overview of the Assets Declaration Ordinance, 2019 (The Amnesty): The above titled ordinance has been promulgated allowing undisclosed, unreported and/or under-reported assets, sales and/or expenditures upto 30th June 2018 and/or the “benami” assets acquired or held on or before the date of declaration to be legally declared for the payment of very low “taxes”.

The Scope is clarified in the section “3” of the ordinance as below:

“Subject to the provisions of this Ordinance, any person may make, on or before 30th June, 2019, a declaration only in respect of any—

• undisclosed assets, held in Pakistan and abroad, acquired up to 30th June, 2018
• undisclosed sales made up to 30th June, 2018
• undisclosed expenditure incurred up to 30th June, 2018; or
• benami assets acquired or held on or before the date of declaration;”

“The Prime Minister still enjoys tremendous trust in his personal integrity and also retains his charisma, but the general atmosphere of uncertainty is severely damaging”

Important Conditions for the Declaration:

Any cash held in Pakistan which is to be declared will have to be deposited into the declarant’s bank account(s) and kept in the account(s) till atleast June 30, 2019.
Any foreign liquid assets repatriated to Pakistan under the scheme are required to be deposited into declarant’s own bank account(s) locally or invested in Pakistan Banao certificates or any foreign currency denominated bonds, issued by the Federal Government.
Any foreign liquid assets declared but not repatriated back to Pakistan under the scheme, in addition to being taxed at higher rate, must be deposited into the declarant’s foreign bank account(s) on or before 30th June 2019.




The Exclusions:
Importantly, the ordinance or as it is commonly referred to as, the amnesty is not applicable to the following:

1. holders of public office and their dependents as well as any of their benamidars if applicable,
2. a public company as defined under clause 47 of section 2 of the Income Tax Ordinance 2001;
3. matters where proceedings are pending in the court of law,
4. matters where the proceedings have attained finality under the respective tax laws,
5. matters where the proceeds or assets involved are derived from a criminal offence,
6. gold and precious stones,
7. bearer prize bonds and
8. bearer assets