Tax Amnesty Scheme for tax evasion or Corruption?

Tax Amnesty Scheme for tax evasion or Corruption?: When the then finance minister of Pakistan Asad Umer announced in the beginning of April, 2019, that government was thinking of launching an other amnesty scheme for tax on the demand of business community it came as a big shock because it was too soom after the previous  amnesty scheme offered last year.

It was surprising on the one hand because it showed that previous tax amnesty scheme was not successful in tempting the tax evaders to join the regular tax club (or is it net), and implicit in this demand was admission that there was tax evasion but unwillingness to follow the normal tax code, rather demand to be allowed to pay tax at a nominal tax rate minus penalties. Instead of taking  firm action through its premier tax collecting agency, FBR, for this brash admission of tax evasion.

THE GOVERNMENT ACCEPTED THE DEMAND OF THE BUSINESS COMMUNITY AND LAUNCHED THE TAX AMNESTY SCHEME THROUGH PROMULGATION OF ORDINANCE TITLED ‘ DECLARTATION OF ASSETS ORDINANCE, 2019’ ON 14TH MAY, 2019.

Normally tax amnesty schemes are offered by the goovernments to those people who are involved in tax evasion, are in breach of tax/ legal code causing immense revenue loss to the state and society as a concession so that these tax evaders commit to abide by legal code in future and lead the life of law abiding citizens enabling the governments to generate reveues for the benefit of state and society.

Tax Amnesty Scheme for tax evasion or Corruption?

The amnesty schemes offer waiver of penalties, prosecution for breach of law of land on one hand as a carrot and stick in case the tax evaders do not avail the opportunity and intend to continue their illegal activities.

In this persepective this scheme is unique: on the one hand, this offers incentive to tax evaders of legalizing their assets that have been created out of money made through economic activities but without pay due taxes under the income tax law,  but also provides incentive to those persons who amassed their assets not only by not paying the income tax.

But also from misuse of public office they were holding in the past that warrants prosecution under relevant laws by the concerned agencies. unbelievable? yes, but this is what this law offers. This is apparent from bare reading of the relevant sections.

4 (2) The provisions of this ordinance shall not apply to a)  holders of public office, their spouses, children, sisters, brothers and parents if the children, sisters, brothers and parents are dependent on the holder of public office during the period of the person holding such public office; ( emphasis supplied)

(b) any proceeds or assets that are involved in or derived from the commission of a criminal offence;

It is therefore, evident the previous holders of public office and their dependents can avail this scheme. Though this itself is not accepatable but what is more worrying is that once availed the amnesty and assets in their name or benami could not be used as an evidence before any court of law.

This is what section 12 envisages:

‘Section 12 :‘Declaration not admissible in evidence.— Notwithstanding anything contained in any other law for the time being in force, nothing contained in any declaration made under section 5 shall be admissible in evidence against the declarant for the purpose of any proceedings relating to imposition of penalty or for the purposes of prosecution under any law including the Income Tax Ordinance, 2001 (XLIX of 2001), the Sales Tax Act, 1990, the Federal Excise Act, 2005 and the Benami Transactions (Prohibition) Act, 2017 (V of 2017).’

SECTION 12 OF THE ORDINANCE SAYS THAT IF TAX IS PAID UNDDER THIS ORDINANCE AT THE NOMINAL RATE SPECIFIED BY THE TAX EVADERS ON THEIR ILL-GOTTEN ASSETS, THOSE ASSETS COULD NOT BE PRODUCED BEFORE ANY COURT OF LAW AS AN EVIDENCE OF THEIR CRIMINAL  ACTIVITY LIKE CORRUPTION ETC. IN OTHER WORDS, THIS IS A CODE FOR covering the corruption of previous holders of public office.

“undeclared asset” means any asset that has remained undeclared, underdeclared including any asset held in the  name of the declarant or in the name of Benamidar as defined in Benami Transaction (Prohibition) Act, 2017 held on June 30, 2018.’

‘Holder of Public Office  has been exhaustive defined to include  the President of the Islamic Republic of Pakistan or the Governor of a Province; (ii) the Prime Minister, Chairman Senate, Speaker of the National Assembly, Deputy Chairman Senate, Deputy Speaker National Assembly, Federal Minister, Minister of State, Attorney-General for Pakistan and other law officers appointed under the Central Law Officers Ordinance, 1970 (VII of 1970), Adviser or Consultant or Special Assistant to the Prime Minister and holds or has held a post or office with the rank or status of a Federal Minister or Minister of State, Federal Parliamentary Secretary, Member of Parliament, Auditor-General of Pakistan, Political Secretary; (iii) the Chief Minister, Speaker Provincial Assembly, Deputy Speaker Provincial Assembly, Provincial Minister, Adviser or Consultant or Special Assistant to the Chief Minister and who holds or has held a post or office with the rank or status of a Provincial Minister, Provincial Parliamentary Secretary, Member of the Provincial Assembly, Advocate- General for a Province including Additional Advocate- General and Assistant Advocate-General, Political Secretary; (iv) the Chief Justice or, as the case may be, a Judge of the Supreme Court, Federal Shariat Court, a High Court or a Judicial Officer whether exercising judicial or other functions or Chairman or member of a Law Commission, Chairman or Member of the Council of Islamic Ideology; (v) holding an office or post in the service of Pakistan or of a Province or of a local council constituted under any Federal or Provincial law relating to the constitution of local councils, co-operative societies established, controlled or administered by or under the Federal Government or a Provincial Government. (vi) persons actively engaged in the day to day management of corporations, banks, financial institutions, firms, concerns, undertakings or any other institution or organization established, controlled or administered by or under the Federal Government or a Provincial Government.

(viii) a District Nazim or District Naib Nazim, Tehsil Nazim or Tehsil Naib Nazim or Union Nazim or Union Naib Nazim.’

Now it is obvious from the collective reading of the above provisions that besides offering amnesty to business community this law also provides legal frame work for the holders of public office in the past to legalize the assets that they may have created by misuse of their official position without being asked any questions. This should not be acceptable.

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