KARACHI, Aug 25: The government is going to announce a whitener scheme to allow undocumented money into the economy and to expand the narrow tax base, Ali Arshad Hakeem, Chairman of the Federal Board of Revenue (FBR), said on Saturday.

The scheme, he said during a meeting with representatives of trade and industry at the Federation of Pakistan Chamber of Commerce and Industry, would be long-term and highly attractive so that a huge chunk of undocumented and informal economy could be attracted and converted into the documented economy.

Sources privy to the meeting told Dawn that Ali Arshad Hakeem said the scheme would begin with a nominal tax rate of 0.8 per cent, to be raised by 0.05 per cent every month.

The FBR chairman further informed the business community that the board had already collected data from banks of around 400,000 million people who had neither National Tax Number nor were they paying taxes.

The FBR, he added, would issue notices to such people asking them to get NTN on payment of a flat amount of Rs30,000 as tax, which would be raised by 10 per cent every year the next two years and thereafter on fourth year they will have to pay tax at normal rates.

The FBR chief assured the business community that if the scheme succeeded the government would be in a position to give relief to trade and industry and also provide other facilities to make them competitive and viable.

Ali Arshad Hekeem said the bureau hoped to raise around two billion rupees by activating institutions like Alternative Dispute Resolution Committee (ADRC), which had been inactive for the last two years.

He hoped that FBR could recover up to two billion towards outstanding taxes if disputes are resolved at the earliest. He hinted at conducting raids on godowns across the country to seize smuggled goods.

The industry leaders complained about defective system of payment to traders and distributors under section 153A(1) of the Finance Act.

The FBR chairman assured them of waiver in the requirement of CNIC for unregistered buyers and also announced extension of the last date — Aug 25 — for filing of sales tax returns.

Ali Arshad Hakeem also agreed to remove the condition of audit for commercial importers who pay three per cent over of the normal sales tax rate (16 per cent) in anticipation of value addition.