It is not merely the OECD countries that have resorted to amnesty schemes for bringing back amounts stashed in secret tax havens. Even countries in the Asia-Pacific region have considered it fit to introduce amnesty schemes for the same. The most attractive of these schemes came from the Philippines.
For tax purposes, a foreign national working in the Philippines is classified either as a resident alien or a non-resident alien engaged in trade or business who stays in the Philippines for more than 180 days in a calendar year. The tax rates for both types engaged in business vary from 5 per cent to 32 per cent.
A resident alien is taxed on his global income. The non-resident alien is taxed on income from the Philippines sources at a flat rate of 25 per cent. There are special definitions for the Philippines-sourced income.
The one-time tax amnesty is available to an expatriate who has not settled his tax liability. By availing himself of the amnesty he can start on a clean slate.
The taxpayer has to file a Notice and Tax Amnesty Return along with a statement of assets, liabilities and network as of December 31, 2005. For individuals, the amnesty tax is 5 per cent of his net worth but not less than the minimum amount of Peso
50, 000. Taxpayers availing of the amnesty will enjoy immunity from civil, criminal or administrative penalties arising from tax liabilities in the covered period.
Such amnesty declaration will not be used against the taxpayer before any judicial, quasi judicial or administrative bodies.
The tax amnesty will not apply to withholding agents with respect to their withholding tax liabilities. It also does not apply to pending cases. Nor will it apply to illegal incomes covered by Corrupt Practices Act involving Anti-Money Laundering Law.
Tax is levied in Singapore on income accrued or derived from the State or deemed to be received in Singapore. Foreign Sourced dividends and branch profits qualify for tax exemption if the amount is remitted after paying tax in the territory from which the income was received.
There is the further condition that such income should have suffered a tax of not less than 15 per cent.
In 2009-10, Singapore expanded the scope of foreign-sourced income exemption scheme and liberalised the conditions to qualify for tax exemption when the foreign sourced income is remitted to Singapore.
Companies would be exempt from Singapore tax on their remittance on all foreign source income earned or accrued outside before 2009 and remitted to Singapore in 2009-10.
The scheme is expected to help businesses in bringing their foreign sourced income in offshore accounts into Singapore and alleviate their current liquidity crisis, thus meeting their finance needs in Singapore without getting taxed in Singapore.
Budget 2010-11, offered a voluntary disclosure programme in South Africa. It was to operate for one year from November 2010 to October 2011.
This is a sort of South African tax and Exchange Control amnesty for those individuals and companies that have undeclared taxes or unauthorised foreign assets. Relief is given in respect of penalties and interest. Full disclosure is required by way of an affidavit.
The Amnesty scheme was extended to corporations after 2003. South African Reserve Bank has published a draft exchange control voluntary disclosure programme.
There were no negative repercussions after the scheme was announced.
Russia declared the first amnesty scheme on March 1, 2007. It relates to undeclared income from 2001 till January 1, 2006. The tax rate will be a flat 13 per cent. There will be no criminal charge. Money can be transferred directly to the Federal Service bank account, without having to deal directly with the tax Officials. There is no minimum or maximum amount to be declared. It will not apply to people who have already been convicted for tax evasion. Russia brought in around $160-billion capital which had flown to outside places in the early 90's
In August 2008, Pakistan announced a tax amnesty scheme to cover declarations in foreign currencies to encourage investors to come forward and declare assets held overseas.
The Federal Board of Revenue made it known that those with undeclared cash, investments and other personal and business assets may wipe the slate clean with the tax authority in return for paying a 2 per cent investment tax. The scheme, however, will not apply to those who have tax evasion cases pending before the department or a Court.
Australia and New Zealand have also implemented amnesty schemes. Malaysia will follow soon.
(The author is a former Chief Commissioner of Income-Tax)