The government’s new plan includes gradually banning these stern restrictions, like foreign travel.
Non-Filers to face THESE 15 restrictions under Pakistan’s tax overhaul. In a latest move to boost tax compliance and revenue, the government of Pakistan plans to end non-filer category from tax laws and implement over dozen 15 restrictions on non-filers’ activities.
FBR data highlights stark contrast in tax compliance with 94pc of middle-income taxpayers adhere to tax regulations, while only 29pc of the wealthiest 1pc do.
Minister of State for Finance Ali Pervaiz Malik highlighted a shift towards a more inclusive consultation process with stakeholders. He stated that FBR is implementing digitalisation initiatives aimed at formalising untaxed sectors and encouraging compliance while also introducing punitive measures against tax evasion, including under-invoicing and mis-declaration.
“We did aggressive taxation of Rs3.5 trillion in one year,” Malik said, noting that the tax-to-GDP ratio has remained stagnant for several years. “We want to broaden our tax base and will go after the untaxed.” He reiterated the government’s commitment to addressing tax evasion and increasing the overall tax-to-GDP ratio, which has remained stagnant in recent years.
The FBR chairman indicated that issues related to employee collusion at ports would be addressed before December. There will be “replaceable system” to not keep them for long at one place, he said, while responding to concerns raised by industrialists about enforcement and documentation in the industry.
Langrial expressed concerns over under-reporting and non-filing, stating that without addressing these issues, existing taxpayers would bear the brunt of increased taxes.
The government’s new plan includes gradually banning these stern restrictions, like foreign travel. Additionally, a proposed annual cash withdrawal limit of Rs30 million will be communicated to banks through the State Bank of Pakistan to discourage cheque-based cash withdrawals. The government also plans to purchase properties reported below market value in tax returns, a provision introduced in 2018 but not yet operational.
- Non-Religious Travel Ban: Prohibition on non-religious travel.
- Cash Withdrawal Limit: Restriction on annual cash withdrawals over Rs30 million.
- Asset Purchase Ban: Non-filers cannot buy properties or vehicles.
- Investment Restrictions: Banned from investing in the stock market and mutual funds.
- Current Account Limitations: Restrictions on opening current bank accounts.
- Higher Withholding Taxes: Imposition of higher tax rates for non-filers.
- Income Proof for Property Purchases: Higher-income filers must justify income sources for property buys.
- Explanations for Other Purchases: Lower-income filers must explain income sources for significant purchases.
- Data Sharing with Banks: Information on non-filers will be shared to limit cheque withdrawals.
- Property Purchases Below Market Value: The government will buy undervalued properties reported in tax returns.
- Cheque Use Restrictions: Limitations on cheque usage for certain transactions.
- Transaction Bans: Gradual bans on 15 types of transactions for non-filers.
- No Tax Exemptions: Non-filers will not qualify for tax deductions or exemptions.
- Business Opportunity Limits: Restrictions on conducting business activities.
- Increased Scrutiny: Enhanced audits and scrutiny for non-filers.
