Good News – Recordings of CPD Sessions (Tax, e.t.c.) for No Charge

IMPORTANT ANNOUNCEMENT

Prophet Muhammad (SAWW/PBUH) said: “Seek knowledge from the Cradle to the Grave”

After tremendous response and with thousands of professional accountants (#ACCA members) having registered and attended the four (4) CPD sessions of the ongoing #2020 CPD series, we’ve been receiving many queries about the recordings of the CPD sessions particularly by those who couldn’t attend.

Although you won’t be able to interact or have a Q&A session but still you’d be able to benefit from the recordings.

Please find below the details and links in this regard:

Link of Youtube Channel: http://www.youtube.com/channel/UCYtxMRR_ryZMhuSOauB1IIQ/videos?view_as=subscriber

Filing of an Appeal to Appellate Tribunal
Date of release: 05th April 2020
http://youtu.be/4l7HUi1CKso

Tax Laws (Second Amendment) Ordinance, 2019
Date of release: 07th April 2020
http://youtu.be/97MfPqtxFnY

Filing of Income Tax Return
Date of release: 09th April 2020
http://youtu.be/hK43tzG4hOw

We hope this will add value during this challenging time and help improve your skills further.

Please share in your circle to spread knowledge and subscribe to keep updated for future shares.

Sincerely,

Omer Zaheer Meer

Managing Partner, (Taxation & Corporate Services), MLCC Member, Global Tax Forum (UK) Chairman MNP & Taxation Subcommittee (Pak), ACCA Member, Editorial Board, Policy Insights, MESA, ACCA

Urgent Opening for experienced Tax Professional

Urgent Opening for experienced Professionals – ACCA preferred

Requisites:
Positive, can-do attitude, Relevant qualification & Tax returns filing experience

SECP knowledge/experience will be advantageous

Perks:
Above market package
Leaning opportunities
Career path

Location:
Lahore

About us:
Pioneer ACCA practising & legal firm

Visit our Website

Read our Profile published by ACCA

Email your CV with cover letter, titled “Your Name – CV for Experienced Tax Professional” position, to:
alimeer@mlcc.pk

Value Proposition – Succeed in life

Unemployed or awaiting a promotion/pay rise?

Facing other challenges in your career? Watch & learn to excel.

File your Tax Returns for 2019

افراد، تنخواہ دار افراد اور ایسوسی ایشن آف پرسنز کے سال 2019 کے ٹیکس گوشوارے جاری کر دیئے گئے ہیں #FBR

File your #IncomeTaxReturn2019 & become a #filer.

Contact us at #MLCC for a seamless, professional & exceptional experience where experienced & top professionals including FCCAs, CFAs, FCMAs, CPFAs, CAs & Advocates will ensure that you all your matters are taken care of with highest standards of excellence.

For more details:

https://www.mlcc.pk/contact.html

Iqbal the Economist & his solutions for Pakistan– Part I

Links of Published Versions of Article:

By:

Omer Zaheer Meer,

CFA (USA), CPFA (UK), FCCA (UK), ACA (ICAEW – UK), AMLE (UK)

Allama Muhammad Iqbal is known to us as a marvel of excellence in all the fields he worked in. He is the visionary who dreamed of Pakistan, the famous Poet of the East, a top philosopher, a revered scholar, a politician, a parliamentarian par excellence and even a spiritual guide for many. Thanks to the recent pioneering work published in the book of my honorable father Mr. Zaheer Ahmad Meer Advocate, titled “The Great Lawyer – 106 Reported Cases of Allama Muhammad Iqbal”, we’re now aware that he was a Great Lawyer too. 

However, what most of us may be unaware of, is the fact that he was also a fine proponent of economics. He wrote his first book on Economics titled “Ilm ul Iqtisadiyat” or “Science of the Economics” in 1903 in Urdu, at the age of just about 26 years old, when no one was doing such work even in English in the sub-continent.

Unfortunately, this first ever book on economics in Urdu language, largely remained unnoticed, not to be realized, never to be properly acknowledged.

Let us remember that during Iqbal’s era, the classics of Adam Smith, John Stuart Mill, Ricardo and Alfred Marshall were taught all over Europe. But in the Indo-Pak subcontinent even teachers and scholars had only a hazy idea of this subject. Actually, it was not even introduced at the University level anywhere in the Indo-Pak subcontinent baring three universities. 

Unfortunately, this first ever book on economics in Urdu language, largely remained unnoticed, not to be realised, never to be properly acknowledged

It is therefore spellbinding that Iqbal had such deep insights into the subject of economics and the economic plight of the Muslims of the sub-continent. He was deeply concerned with the unequal income distribution that turned the rich richer and the poor poorer, a challenge we still face across the globe and in our homeland, Pakistan. The mere writing of ‘Ilm ul Iqtisadiyat’ renders him economist in the same-way as the Wealth of Nations (1776) made Adam Smith an economist, or the Das Captia portrayed Karl Marx as one; albeit the context eventually differed.

Iqbal also pointed out on 28 May I937 that: “The problem of bread is becoming more and more acute. The Indian (Muslim) has begun to feel that he has been going down and down during the last 200 years. Ordinarily he believes that his poverty is due to (Hindu) money-lending or capitalism. The perception that it is equally due to foreign rule has not yet fully come to him. But it is bound to come.”

Allama Iqbal, the learned enigma and a great thinker of Islam, was actually the first economist of the Indo-Pak subcontinent to raise his voice against the exploitation of Muslims by domestic and foreign classes controlling the means of production.

While, Dr. Muhammad Iqbal was anti-Imperialism in his thought process, yet he was able to point out the key problems as well as draw up workable solutions to address them.

1. Welfare based wealth

Iqbal presented the concept of welfare based wealth, distinguishing it from the traditional wealth.  An example to elaborate the concept would be that if skilled labor were enslaved for forced labor, it’ll increase the national wealth but will be detrimental to the welfare based wealth of the citizens and wider humanity. Similarly a pledged property may be accounted for as the wealth of the creditor in the event of a default but won’t meaningfully impact the overall wealth of the state.

2. Population Control

Surprisingly, Allama Iqbal also pointed out the excessive increase in population as a core issue at times of saturating economic resources, in an era when no one in the Islamic world did that. He very logically explained that while increase in population can be productive in a scenario of untapped or plentiful economic resources, it becomes counter-productive economically when the situation reverses, unless, other economic avenues can be explored to further create economic opportunities for growing population.

We can all appreciate, how this issue identified in 1903, has become a core economic concern for us in 2019, albeit 116 years later. I ask you all, what else do you call vision & foresight, if not this?

3. Economic Equilibrium in local context

Iqbal also advocated that a research-based analysis can determine the equilibrium in various sectors of the economy and modes of factor pricing as per the local context. Yet, at the same time he also urges to focus upon human development through exploration and preservation of natural resources and improving human and societal relations. By doing so, Iqbal practically envisioned today’s HDI (human development index).

4. Specialized Production/Services

Iqbal has also put forth various strategies used by recent economic success stories. For example, he discussed regional specialization in producing goods and services and brought in the notion of comparative cost, concepts that China practiced in its economic resurgence. This basically advocates for a country or its federating units, e.t.c. to focus its expertise in their specialzied area of production/services while accounting for the opportunity cost of producing that good or service in order to achieve economic optimization.

The writer is a leading economist and experienced tax expert who holds five top professional finance, investment and accountancy qualifications CFA (USA), CPFA (UK), FCCA (UK), CA (ICAEW, UK) & Anti-Money Laundering Specialization along-with substantial international exposure and represents Pakistan on Global Tax Forum while sitting on the boards of several think-tanks. His profile can be accessed at: https://omerzaheermeer.wordpress.com/about

Tax Amnesty: Results, Challenges faced & Follow-up required

Links of Published Versions of Article:

By:

Omer Zaheer Meer,

CFA (USA), CPFA (UK), FCCA (UK), ACA (ICAEW – UK), AMLE (UK)

With the deadline for declaring undisclosed assets, sales and expenditures under the Asset Declaration Ordinance, 2019 (commonly referred to as Tax Amnesty scheme) being over, it’s time to analyze the results, experiences during the process and the follow-up required.

Asset Declaration Ordinance, 2019 was promulgated on 14th May 2019. The stated aim of the initiative was to bring new people, previously unregistered, within the tax-net voluntarily. The initial response just like the 2018 Tax Amnesty scheme was lukewarm, perhaps owing to both the lack of clarity and the Ramadan and Eid festivities.

Initiatives that showed intent

Thankfully, following our advice, the concerned quarters ran public information campaigns and announced that they had successfully integrated databases of various authorities in the country and now also possessed the information gained via OECD multilateral convention about Pakistani residents’ offshore accounts and are further strengthening the mechanism to launch a compliance drive immediately following the amnesty. An adjudication authority for enforcement of The Benami Transactions (Prohibition) Act, 2017. This, after a lapse of almost two years since the law came into being, signaled the seriousness of the government for enforcement action.

The scheme, however, really took off in the last ten days of June 2019 with the seriousness of the Government in enforcement becoming even more clearer and the arrests of top political figures by NAB and stringent sentence in corruption case of ex bureaucrat by the Supreme Court of Pakistan sending strong messages.

The promised enforcement action coupled with structural reforms to eliminate taxpayers’ harassment and to rationalize the tax system should be undertaken. Without these measures, this scheme would be remembered as just another one in the history of the amnesties launched in Pakistan. However, with the right approach and actions this can become the turning point for the taxation compliance culture in Pakistan”

Moves that backfired

NADRA and FBR then tried to further shore up these efforts by launching their databases. NADRA launched its database first with initially a fee of Rs. 500 to access the records of a person held by NADRA. Unfortunately, it was a disaster due to the lack of data and the people were taken aback that if this was the data held by the authorities then nothing much has changed. The move backfired big time. Many people started talking of taking a “risk” believing that the claims are a façade.

Next came the FBR database, free to access. The quality of data was better than NADRA’s database but was still very weak. However, FBR atleast did the sensible thing of posting a message that it was not a complete profile and that the details were still being populated from the database. A rumor was also spread claiming that whoever logged in to the databases would be recorded and followed up by the FBR. This negativity infact saved the day with people starting to avoid checking their profiles and simply preferring to avail the scheme to streamline their affairs.

Experiences and Challenges

Despite these setbacks, most of the people, including those belonging to the powerful segments as retired military officials, bureaucrats, judges, journalists, e.t.c. were flocking to avail the scheme. Just a clarification that the bar on Government employees’ being excluded from the scheme was for those currently serving or retired within the last 10 years.

With the results showing healthy signs and uniform demands of an extension from all professionals, tax practitioners, legal fraternity, chartered and chartered certified accountants, businessmen, e.t.c., the Government did the best it could in the face of the IMF pre-conditionality of no Amnesty scheme during their program, which was an extension of 3 days, till 3rd July 2019. The response erupted!

People were literally running from pillar to post to avail the scheme in the last few days which led to regular breakdown of the online system of FBR (IRIS). With extreme load on the last day, the system constantly got choked. Furthermore, a confusion led to the rumors of the systems being partially shutdown at 5 PM on 3rd July 2019 instead of the usual tacit understanding of the English calendar’s end of day at 11:59 PM, in line with the past practices of the FBR. This led to atleast 6,000 applications of the already paid tax being stuck in the system with tens of thousands not being able to submit. Mr. Shabbar Zaidi, the FBR Chairman, allowed the processing of the former while the fate of the latter remained unclear to this moment.

 The Results

Despite all the challenges, the scheme became the most successful in terms of the numbers availing the scheme and the new tax registrations being issues. At the time of publication, 137,000 people had availed the scheme compared to 84,000 over a much larger duration in the 2018 amnesty scheme. Out of the 137,000, almost 100,000 were new tax registrations. With the stuck cases being cleared, the number is expected to grow from 137,000 to closer to 150,000. Almost $ 20 billion worth of previously undisclosed assets were declared. However, the tax collection was less compared to the 2018 scheme owing to the low rates of this scheme (1.5% – 4% for most asset classes) compared to the last one’s 5%.

Way Forward

The challenges faced during this scheme should be studied, and lessons learned for the future particularly about the capacity building of the state institutions both in terms of the human resource and the technology. The promised enforcement action coupled with structural reforms to eliminate taxpayers’ harassment and rationalize the tax system should be undertaken. Without these measures, this scheme would be remembered as just another one in the history of the amnesties launched in Pakistan. However, with the right approach and actions this can become the turning point for the taxation compliance culture in Pakistan.

The writer is a leading economist and tax expert who holds five top professional finance, investment and accountancy qualifications CFA (USA), CPFA (UK), FCCA (UK), CA (ICAEW, UK) & Anti-Money Laundering Specialization along-with substantial experience and represents Pakistan on Global Tax Forum while sitting on the boards of several think-tanks. His profile can be accessed at: https://omerzaheermeer.wordpress.com/about

Avail the Amnesty & Sleep Peacefully!

By:

Omer Zaheer Meer,

CFA (USA), CPFA (UK), FCCA (UK), ACA (ICAEW – UK), AMLE (UK)

Links of Published Versions of Article:

The PM’s Counsel:

In a pre-recorded message released on social media and elsewhere, the Prime Minister Imran Khan, while addressing the nation said that only 1% out of the 220 million Pakistanis bear the burden of taxes. He painfully shared that the nation is suffering, as many are not fulfilling their lawful duties and paying their due share to the State. PM Imran Khan also shared that the institutions now have information and are constantly getting more, implying that they have also developed the mechanism to identify and followup the tax evaders. The PM concluded by saying that this is the last chance to avail the recently launched tax amnesty till 30th June 2019 and sleep peacefully while also contributing to your nation. The spirit of the message is right.

Changing Times:

The times are surely changing for the taxation landscape in Pakistan with transnational cooperation from organizations such as OECD (Organisation for Economic Co-operation and Development), newer laws being enacted such as the Benami Act and the technology shaping the data-driven focus of the tax machinery.

What used to happen in the past was that either people used to connive with some corrupt officials or simply stay out of the tax net willfully to avoid full disclosure of their actual wealth, sales, expenses, e.t.c., while accumulating assets in their own, their family or trusted or controllable third party’s names. While this was very common, some people would simply behave in a similar manner due to ignorance of the laws and the resulting implications. This used to result in both the tax evasion as well as mis-declarations with often the use of benami transactions. The FBR, unfortunately, neither had the capacity nor the information to detect and/or take any penal action. Hence there was not much to worry for such people and they believed it was easier and perhaps “better” to continue with such practices. These notions stand to fail now.

Possible Nightmares:

Imagine this. You bought a good expensive property for your son or daughter in a posh area, perhaps Bahria Town Karachi or DHA Lahore. One day, you get the news that this same property led to the arrest of your beloved kid and the confiscation of the property. How would you feel?

Or alternatively imagine your father being arrested in front of you for not being able to justify the money trail of your hard earned empire. Or that loyal servant of yours being taken away for holding a benami for you while the property is getting confiscated, atleast partially. Nightmares? Yes. But the good news is that you can save yourself from all these and other troubling possibilities at a fraction of the cost that you may have to incur otherwise in such instances.

So it is only logical to avail the “Tax Amnesty” to both serve your interests as well as those of the country and be able to sleep peacefully as the PM told us.

Information, Capacity & Technology :

Pakistan is already receiving information courtesy of the OECD collaborations about the foreign properties, bank accounts and other assets of the Pakistani residents. Multiple FBR Chairmen in the past, have also claimed to have database of three to four million people without an NTN (national tax number) but enjoying a lavish life style with multiple foreign trips and/or assets in their name. As if this wasn’t sufficient, FBR has over time acquired the data as a result of the withholding tax regime. Last but not the least, the coordination between FBR, NADRA, FIA, e.t.c. is bound to make life difficult for the willful tax evaders as well as the ignorant culprits once the relevant drive is started.

Political Will & Penalty Provisions:

Chairman FBR has already shared his intention to launch a drive to catch tax evaders and mis-declarants post amnesty deadline of 30th June 2019. State Minister for Revenue, Mr. Hammad Azhar had shared about the integration of various databases which will certainly be used for such a drive. This is also supported by the fact that due to the filer/non-filer differential taxation regime and the withholding regime a lot of the data regarding immovable properties and other assets is already received by the FBR. It’s not like the past when the Federal Board of Revenue struggled for the data.

To make matters more “interesting” for tax evaders, the FBR issued the Benami Transactions (Prohibition) Rules 2019 on 11th March 2019. With this, the Benami Transactions (Prohibition) Act 2017, came into force.

The practice of holding benami property — moveable or immoveable — plays a significant role in enabling tax evasion, money laundering and terror financing.

This law entails strict punishments for persons entering into benami transactions. Any person found guilty of the offence will be punishable with rigorous imprisonment of at least one year, which may extend to seven years, and a fine of up to 25 per cent of the fair market value of the property. The Income Tax Ordinance 2001, already contains severe punishments for mis-declarations and/or tax fraud which can range from heavy penalties to prosecution.

The Misconceptions:

A common misconception is that paying taxes and then buying a benami assets would be fine. Not paying taxes is one offence and holding a benami asset is another offence.

Another wrong notion held by many is that if you’re not earning taxable income or if your tax is already been deducted you do not need to hold an NTN or file your tax returns. They’re both wrong.

You have to get an NTN and file your return even if you don’t have a taxable income but own immovable property with a land area of two hundred and fifty square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory or even own a motor vehicle having engine capacity above 1000 CC or even have a  commercial or industrial connection of electricity where the amount of annual bill exceeds rupees 500,000.

There are thousands of property owners in each of the major housing societies such as DHA, Bahria Town and many other private ones in the major urban centers. How many of them have declared their affairs and even those who have, how many of them have the proper paper trail? All of them would be liable to punitive action under the above laws.

Your Last Chance:

Keeping in view of the above facts, the pressures on the national exchequer, the international and local collaborations and technological tools to use data analytics and the will of the Government to enforce the law, all these indicate that it is in the best interests of those who either because of being unaware of the law or even willfully, were in breach of the laws, should take this “golden” opportunity to avail the “Tax Amnesty” offered by the Asset Declaration Ordinance, 2019 whereby they can “whiten” their wealth, undeclared sales, expenses and/or the benami assets for as little as 1.5% only. Compare this to the potential tax and penalty costs which can be as much as 25% – 50% of the property value alongwith upto seven (7) years of rigorous imprisonment. So it is only logical to avail the “Tax Amnesty” to both serve your interests as well as those of the country and be able to sleep peacefully as the PM told us.

Technical Overview of the Amnesty: https://omerzaheermeer.wordpress.com/2019/05/19/pti-govts-tax-amnesty-past-facts-and-the-path-forward/

The writer is a leading economist and tax expert who holds five top professional finance, investment and accountancy qualifications CFA (USA), CPFA (UK), FCCA (UK), CA (ICAEW, UK) & Anti-Money Laundering Specialization along-with substantial experience and represents Pakistan on Global Tax Forum while sitting on the boards of several think-tanks. His profile can be accessed at: https://omerzaheermeer.wordpress.com/about

To learn more about the amnesty or obtain professional advise:
http://www.mlcc.pk
Call: 042-37242434 / 042-37242612
Email: ozmeer@mlcc.pk