Federal Board of Revenue (FBR) in Pakistan is taking a tough stance on tax evasion with a two-pronged attack targeting non-filers. Their goal is to boost national tax revenue and broaden the tax base.
FBR’s bold initiative proposes a significant increase in withholding tax for non-filers. Currently at 2.5%, the tax is proposed to jump to a much steeper 90%. This means that if a non-filer tops up their mobile phone with Rs 100, a staggering Rs 90 would be deducted and credited to the tax authorities.
FBR has already identified over 500,000 non-filers and directed Pakistan Telecommunication Authority (PTA) and telecom companies to block their SIM cards. As of now, around 11,500 SIM cards have been blocked, with further restrictions anticipated in the coming days. Telecom companies have a deadline of May 15th to complete the SIM blockages for all identified non-filers.
FBR has meticulously selected non-filers for SIM blockages based on specific criteria. This includes individuals with previous taxable income declarations and those who failed to file for the 2023 tax year. The Express Tribune previously reported that FBR might resort to legal action against telecom companies who fail to comply with the SIM blockage directive by May 15th.
Despite FBR issuing the Income Tax General Order (ITGO) mandating the SIM blockages, telecom companies initially resisted the move. They argued their obligation to provide uninterrupted services according to the Telecom Act and relevant regulations. However, following discussions with FBR, they appear to have changed their stance and are cooperating with the initiative.
FBR’s two-pronged approach – the proposed 90% withholding tax hike and SIM card blockages – represents a significant effort to encourage tax compliance among non-filers in Pakistan. This strategy aims to incentivize non-filers to fulfill their tax obligations and ultimately broaden the country’s tax base.
