KARACHI, July 3: The Federal Board of Revenue (FBR) has launched an amnesty scheme under which hidden income and assets could be ‘whitened’ on paying two per cent investment tax as envisaged in the budget 2008-09.

The scheme is valid for a period of six months starting from July 1 to December 31, 2008 under which the existing as well as new taxpayers could benefit by disclosing their black money, including moveable and immovable assets.

The main objective of the Investment Tax Scheme (ITS) 2008 is to broaden the tax net and it is based on Egyptian and Turkish models, where such amnesty schemes worked successfully.

However, tax consultants expressed their apprehensions about the success of the scheme, which has put a condition of paying two per cent investment tax on fair market value of assets at the time of declaration of all moveable and immovable, undisclosed and unexplained investments and assets.The scheme launched through FBR circular No. 3 of 2008 dated July 1, 2008 also allows new taxpayers availing the amnesty to file return of income for the tax year 2008 and the subsequent three consecutive tax years. This will help to broaden tax net and improve tax-to-GDP ratio, which stands at around 12 per cent.

Ali Rahim, a tax expert, told Dawn that the condition will create hassle for taxpayers, who may be reluctant to avail the amnesty scheme because the FBR has not laid down the parameters for determining the fair price of the assets.

He further said that in the past whenever the government offered tax amnesty schemes the FBR issued guidelines for determining the value of moveable and immovable assets.

Income Tax Bar Association Karachi president Abdul Qadir Memon expressed his concern over the condition laid down in the ITS 2008 for meeting deficiency by a taxpayer in his declaration in respect of undisclosed income and assets within ten days of the notice issued.

He said actual spirit of the scheme is diluted once the FBR puts any sort of condition to be met by a taxpayer. In Egypt and Turkey the scheme succeeded as it raised no questions and taxpayers were allowed to declare their black money in a free and friendly environment, he added.

All Pakistan Tax Bar Association former president Younus Rizwani Sheikh said that the condition not to give depreciation allowance in respect to building, plant and machinery or other depreciable assets declared under the scheme, is a good move as it will help a taxpayer to realise the loss for staying out of the tax net.