Pakistan Declares Tax Amnesty for 2024

In a move to stimulate economic growth, Pakistan has unveiled a tax amnesty for specific foreign currency transactions in the 2024 tax year.

The Federal Board of Revenue (FBR), Pakistan's apex tax agency, has amended the Income Tax Ordinance, 2001, to introduce this amnesty and incentivize individuals to participate in foreign currency-related activities.

The revised Income Tax Ordinance, 2001, incorporates specific provisions in section 111, which addresses unexplained income or assets. According to the amendment, these provisions will not be applicable to:

(i) Any foreign exchange amount deposited in a private Foreign Currency account with an authorized bank in Pakistan, following the Foreign Currency Accounts Scheme introduced by the State Bank of Pakistan. However, the exemption does not apply to incremental deposits made on or after December 16, 1999, in such accounts held by a resident person or for any amount deposited in accounts opened on or after that date by such an individual.

(ii) Any amount invested in acquiring Three Years Foreign Currency Bearer Certificates issued under the Foreign Currency Bearer Certificates Rules, 1997.

(iii) Rupees withdrawn or assets created from such withdrawal in rupees from private foreign currency accounts or the encashment of Foreign Exchange Bearer Certificates, US Dollar Bearer Certificates, and Foreign Currency Bearer Certificates.

This tax amnesty serves as a strategic measure by the Pakistani government to attract foreign currency transactions and investments. By excluding certain foreign currency activities from scrutiny under unexplained income or assets regulations, the government aims to create a favorable environment for individuals to engage in legal and transparent foreign currency transactions.

The State Bank of Pakistan's Foreign Currency Accounts Scheme has played a pivotal role in facilitating foreign exchange deposits in authorized banks within the country. The exemption provided for deposits made under this scheme encourages individuals to utilize private Foreign Currency accounts, promoting stability and growth in the foreign exchange market.

Furthermore, the inclusion of Three Years Foreign Currency Bearer Certificates in the tax amnesty underscores the government's focus on encouraging investments in financial instruments that contribute to the nation's economic development. This not only provides a secure investment avenue for individuals but also stimulates economic activities by directing funds into productive sectors.

Additionally, the exemption for rupees withdrawn or assets created from private foreign currency accounts demonstrates the government's commitment to supporting individuals converting their foreign currency holdings into the local currency. This could potentially enhance liquidity in the domestic market and boost financial stability.

The tax amnesty for foreign currency transactions is anticipated to positively impact Pakistan's economic landscape, attracting foreign investments and promoting financial transparency. The government's proactive approach in updating tax regulations reflects its dedication to creating a business-friendly environment and encouraging responsible financial practices. As individuals take advantage of this amnesty, Pakistan envisions a surge in foreign currency transactions contributing to the nation's economic growth in the years ahead.

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