Prime Minister Shahid Khaqan Abbasi, after a meeting of the Economic Advisory Council, on Thursday announced tax reforms aimed at clamping down on tax evaders.
PM Abbasi’s five-point tax reforms package
CNIC numbers to be made NTN numbers to tax all citizens.
Income tax brackets and percentages will be revised. Complete exemptions on annual income up to Rs1.2m; maximum percentage of 15pc to be levied on income above Rs4.8m per annum.
Locally-held assets can be declared on payment of 5pc penalty; internationally-held assets on 2pc. Those who avail scheme to be granted one-time exemption from accountability laws.
A 2pc preemptive tax will need to be paid on all property transactions. Further, the govt will retain the right to purchase any property by paying 100pc over and above its declared value.
The government will monitor citizens’ financial records and issue notices if they find evidence of tax evasion.
Announcing his five-point tax reforms package, PM Abbasi began by specifying that “the CNIC numbers of all citizens will now become their tax number. People will now be able to use their CNIC number to file taxes by simply filling a form.”
“Income tax has been reduced to make tax payment more sustainable,” he continued. “At the moment, the [maximum income] tax percentage stands at about 30 per cent. However, after much discussion, we have decided to bring that percentage down drastically,” the prime minister said.
“People who make less than Rs100,000 [a month; Rs1.2 million a year] will now be exempt from paying taxes. People who make between Rs1.2m to Rs2.4m will be liable to pay five per cent in income tax,” he explained.
The income tax for the Rs2.4-Rs4.8m bracket will be 10pc. PM Abbasi added: “Those earning over Rs4.8m annually will be liable to pay 15 percent tax on their income.”
“The third point in these reforms is that we are introducing a tax amnesty scheme through which people with assets within the country will be able to bring them within the tax net by simply paying a five per cent penalty,” the prime minister said.
He added that people who hold undocumented assets outside the country will be able to bring their money back to the country by paying a 2pc penalty.
“People who take part in the amnesty scheme will be given a one-time exemption from accountability and other laws,” the prime minister explained. However, he stressed that politically exposed persons and their families will not be able to avail the amnesty scheme.
Moving on to point four, the prime minister said: “On any property that a citizen purchases, they will have to pay a two per cent ‘pre-emptive tax’. That tax will be adjusted in their annual taxes.”
“To avoid under-invoicing [in property sale and purchase deeds], the government now holds the right to buy any property that a citizen holds by paying 100 per cent over its declared price,” he warned.
“Lastly, the government will be able to now monitor all financial transactions that citizens make so that they do not evade tax,” the prime minister said, explaining that the government is able to monitor all financial transactions and will send notices to non tax-paying citizens and tell them to explain their financial situation.
“We do not want to send the police to anyone’s home or alert the Federal Board of Revenue, but our citizens need to be responsible and pay their taxes,” PM Abbasi stated.