News
Tuesday, October 19, 2010
Remittances invested in dead assets to be taxed
* Investment in industrial sector to be exempted from probe of source of income
By Sajid Chaudhry
ISLAMABAD: The Tax Reform Co-ordination Group (TRCG) has reached a consensus that income tax exemption on investment of remittances (black money) in dead assets should be withdrawn and this exemption will be limited only to investment in industrial sector, services sector and other commercial activities that generate job opportunities, official sources said on Monday.
The TRCG meeting chaired by Finance Minister Dr Hafeez Shaikh discussed proposals to improve investment climate and increased resource mobilisation in the country, however the State Bank of Pakistan governor present in the meeting, strongly opposed the idea and was of the view that taxing remittances would have implications on the monthly and annual inflow of foreign exchange sent by overseas Pakistanis, the sources added.
The sources said that a sub-group on income tax had recommended to the Finance Ministry that large amounts of ‘black money’ was being transferred to Dubai and other countries and this black money had been coming into the country in the shape of remittances.
The investment of such remittances is exempt from income tax under the Section 111 (4) of the Income Tax Ordinance 2001. Black money routed into the country in the shape of remittances had been invested in the non-productive sectors of the economy, like the purchase of real estate and other dead assets, which has been depriving the country of due tax. The sub-group had suggested the government to limit the income tax exemption on remittances being invested to only the industrial sector. However, the meeting was also of the view that remittances investment in the services sector and other commercial activity should also qualify for income tax exemption. The meeting was also of the view that remittances amount invested in dead assets and real estate should be brought under the tax net through an amendment in the Section 111 (4) of the Income Tax Ordinance 2001.
Courtesy www.dailytimes.com.pk