Islamabad – Pakistan’s Finance Minister Ishaq Dar has denied media reports about imposing new taxes on remittances from overseas Pakistanis in the new budget to be announced on June 5.
Foreign remittances are vital to Pakistan’s economy which has suffered in recent years from low foreign exchange reserves. The South Asia’s second-biggest economy was forced to seek a loan from International Monetary Fund in 2013 to stave off a balance of payment crisis.
Pakistani workers sent $14.96 billion in July-April, 2015, about $2.1 billion sent from the United States, according to the State Bank of Pakistan data.
Speaking at a function in Islamabad on May 22, Dar quashed speculations and firmly stated that no tax on remittances would be imposed on remittances in the federal budget and no such proposal was under consideration.
Dar’s comments came in response to media reports quoted the top tax official as telling a Senate Standing Committee this week that some restrictions on foreign remittances were under consideration to prevent tax theft and also to bring them under the tax net.
Growth in global remittances will slow sharply this year due to weak economic growth in Europe, deterioration of the Russian economy and the depreciation of the euro and ruble, according to a World Bank report issued in April.
The second quarterly report by the State Bank released on May 15 also noted that the decline in oil prices may hurt growth in Pakistan’s remittances from the Gulf countries which account for more than one-third of the total amount being sent by the overseas Pakistanis.
Officially recorded remittances to the developing world are expected to reach $440 billion in 2015, an increase of 0.9 percent over the previous year, according to the World Bank. Global remittances, including those to high income countries, are projected to grow by 0.4 percent to $586 billion, the report said.
The United States is among the top five migrant destination for remittances along with Saudi Arabia, Germany, Russia and the United Arab Emirates, the World Bank said. The top five remittance recipient countries, in terms of value of remittances, include India, China, Philippines, Mexico and Nigeria.