Amongst so many amnesties we are offering, in one way or the other, how about offering a Startup Amnesty Scheme?
I know, it may sound strange to even suggest an amnesty to whiten the black money. The tax evaders should rather be dealt with an iron fist without exceptions...
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I know, it may sound strange to even suggest an amnesty to whiten the black money. The tax evaders should rather be dealt with an iron fist without exceptions...
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If at all, one needs to carefully design these schemes only for maximum benefit to society at large, barred by time limits and followed by strict action for non-compliance. What I am going to suggest here is not a typical conventional amnesty where a tax evader gets a legal..
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..and protected wayout while having these opportunities every now & then with offers being perpetuated for good.
The Govt of Pak has already promulgated an Ord. to offer a 3rd tax amnesty, again for industrialists only-by offering them to whiten thr black money at 5% rate...
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The Govt of Pak has already promulgated an Ord. to offer a 3rd tax amnesty, again for industrialists only-by offering them to whiten thr black money at 5% rate...
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...and being offered across the board, through investment in the manufacturing sector, waiving off up to 49% tax charges with no question asked on sources of funds. The beneficiaries will be setting up dedicated vehicles to pour in this money flow into the industrial sector.
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If offered at all, and unlike conventional measures, an amnesty has to serve a wider purpose where not only the black money becomes whitened, but it also creates value to society at large with extended benefits.
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On those lines, the idea of offering an amnesty to Startups (an emerging young company, or a project backed by an entrepreneur(s) challenging conventional perspective, ways and mindsets, while addressing a key problem facing the ecosystem) does have some merit.
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Esp, when we have never felt bad by offering a number of amnesties over the period, most of which have not really yielded results or made any positive impacts to society, otherwise called unproductive amnesties. For instance, out of many amnesties offered so far, the last..
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...huge amnesty scheme offered by the govt, which stayed for a long period of time, was for the least productive sector i.e. real estate, which failed to create the needed trickle-down impact where all the stakeholders of society could have benefited. But as expected, only...
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...a handful benefited, given the fact that the price of the land shot up as a result of this. Labour & low-skilled as well as those wishing to own a small piece of land kept dreaming about it only.
So, to make things work somewhat better and to go the unconventional way,...
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So, to make things work somewhat better and to go the unconventional way,...
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..how abt offering a targeted amnesty and to those having undeclared wealth both onshore and offshore? This can be done by asking them to invest in emerging local Startups trying to build new knowledge & innovation economy, which will completely whiten the black money too?
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See, we've tried many amnesties so far; again going for another mostly similar one. Why not 1 for Startups that instils a purpose with massive potential to not only turnarund the economy & disrupt convntional ecosystem,but to also address chronic problems facing the society?
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It's not because we need an amnesty to whiten the black money and bring the undocumented economy into the tax net. But more because we need capital at this early-stage of a new ecosystem, where we need most angel investors to fill in the vacuum and support our burgeoning...
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...young talent willing to disrupt the conventional ways of doing business, solve a problem, address a pain-point, and make an impact in people’s lives.
Though incentivizing such investments through tax cuts is also possible, but that way...
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Though incentivizing such investments through tax cuts is also possible, but that way...
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..i) the undeclared wealth will remain undocumented; ii) cutting existing taxes will have an impact on tax collections in the short run; and iii) tax cuts should be across the board and not just for this purpose, as Pakistan is a tax-heavy country in the entire Asian region.
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We've taxed basics, incl. food, medicines, agriculture, internet & emerging tech, from solar to EVs, and means to achieve digital economy, incl. mobilephones, tech gadgets & laptops, while most unhealthy ones like sugar, cigarettes & aerated beverages remained low-taxed...
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We need to reverse these policy distortions having misaligned action-goal framework at the earliest for developing an ecosystem that is aligned with our future goals; encourages incentive for health, innovation, growth, progress and prosperity.
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Startup amnesty policy needs to be simple and easy: invest in Startups and get away with questions on money trail, sources of income and so on. As simple as that. Startups need to be registered, domestically-domiciled with a bank account, and independent of investors...
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...means no relations in case of an amnesty investor, as investor should not be allowed to create Startups as vehicles just to whiten black money.
Investment should not be more than 30% per party (to keep the sanctity of the cap table intact)...
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Investment should not be more than 30% per party (to keep the sanctity of the cap table intact)...
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Best would be to capture this money through a dedicated Amnesty Fund, which then invests purely in Startups, primarily tech-driven Startups in the country, followed by non-tech.
Further, black money coming through Startups should be taxed for income only (CGT, dividends)...
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Further, black money coming through Startups should be taxed for income only (CGT, dividends)...
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...while white money should be rather tax-incentivized that invests in Startups (no CGT, single-layer dividnd tax only).
Min. ticket size could be allowed from $50K/PKR10mn to avail the amnesty for Startups, with no limit to max ticket to be whiten by investing in Startups.
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Min. ticket size could be allowed from $50K/PKR10mn to avail the amnesty for Startups, with no limit to max ticket to be whiten by investing in Startups.
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However, the definition of a Startup needs to be developed for a structured approach & proper docs by the regulators. If we like to give a way for black money to come into the formal system, why not channelize it into productive areas/schemes than conventional means/sectors?
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The amnesty money should support the new knowledge/innovation economy at least, instead of the same old rent-seeking non-productive ones as well as those health-damaging sugar, cigarettes, aerated beverages, amongst others, not to mention least productive real estate sector.
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In fact, it would be even better to make Startup investing totally tax-free for investors & companies alike for few years to help attract investment towards innovation economy, and for Startups as well so they could reinvest their tax savings into R&D, new technologies..
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...and talent to create more value, achieve higher sustainable growth through innovation by developing global applications and scalability for sustainable export earnings for the country.
Investment in Startups will address many problems with this amnesty idea, such as...
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Investment in Startups will address many problems with this amnesty idea, such as...
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..It will support young entrepreneurs with much-needed capital at early stages; help uplift new ideas with tech-driven lean businesses bringing innovation & efficiencies to the economy alongside supporting development of intellectual capital (talent pool)...
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..and more hands to give (invest) thereby driving demand for Startups, bringing equilibrium to the demnd-supply gap in the market where at the momnt only a handful of capital providers are talking only their terms while evn best of Startups are at mercy of capital providers.
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As per @alphabetacore ABCore, Pak Startup ecosystem attracted $375mn+ in 2021-double the size of last 6yrs combined. A carefully designed and a well-planned Startup-dedicated amnesty scheme is expected to easily attract over a couple of $Billions for a yr to set the pace in.
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Here's the complete piece in 2parts on Startup Amnesty idea:
How about a Startup Amnesty? Part I google.com
How about a Startup Amnesty? Part II
google.com
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@ImranKhanPTI @FinMinistryPak @investinpak @StateBank_Pak @SECPakistan @FBRSpokesperson
How about a Startup Amnesty? Part I google.com
How about a Startup Amnesty? Part II
google.com
28/28
@ImranKhanPTI @FinMinistryPak @investinpak @StateBank_Pak @SECPakistan @FBRSpokesperson
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