The Federal Board of Revenue might go after 1.4 million non-filers, who are not on the active taxpayers’ list (ATL), by issuing a similar order to the telecom operations and the authority to block their mobile SIMs, according to a tax expert.
The SIMs of over 1.4 million individuals not on the ATL could potentially be blocked, renowned tax expert Asif S Kasbati told the Business Recorder. It would include more than half a million non-filers identified by the tax authority in April.
It could be done through a similar Income Tax General Order, which the board issued last month to disable the mobile phone SIMs in respect of persons “who are not appearing on active taxpayer list but are liable to file the Income Tax Return for Tax Year 2023 under the provisions of the Income Tax Ordinance, 2001”.
The FBR ordered the Pakistan Telecommunication Authority and telecom operators to block mobile phone SIMs of 506,671 non-filers. But the telecom operators refused to adhere to the request on Saturday, stressing the need for “striking a balance” between the FBR’s move to disable SIMs and protecting the telecom operators’ investment.
Kasbati was of the view that one or more ITGOs may be issued in the future, potentially affecting around 835,000 individuals. This number represents the difference between the ATL for Tax Year 2023, which stood at 4,073,068 individuals as of April 30, 2024, and the taxpayers on the Tax Year 2022 ATL, which numbered 5,416,068 individuals as of January 1, 2024.
The FBR’s objective appears to expedite actions against taxpayers who have filed returns for Tax Year 2022 but have not yet filed for Tax Year 2023, he added.
According to Kasbati Co numerical Analysis, it is projected that the SIMs of the remaining 893,000 or more individuals could be blocked by June 15, 2024, primarily targeting older taxpayers rather than achieving the objective of broadening the tax base.
The SIMs of 507,000 individuals may be blocked by May 15, as the government orders the PTA and telecom operators to ensure compliance with the initial ITGO “immediately”. The blocked mobile SIMs would only be restored upon approval from the FBR or the relevant commissioner of Inland Revenue.
The tax expert also advised all entities, including suppliers and buyers, to have income tax and sales tax registration to avoid future complications. He suggested using the FBR website link to check the registration status.
Kasbati, who is also the ICAP Fiscal Laws Committee member, said that the number of taxpayers could reach six million by December 31, 2024. To achieve this target, the FBR can utilise various strategies, including data mining of withholding taxes, collaboration with NADRA and Provincial Revenue Authorities for properties and motor vehicles, and bringing a significant number of non-tier 1 traders into the tax net.
He highlighted the estimation made by former FBR adviser Waqar Masood in December 2020, suggesting that there are 7.4 million potential non-filers. Former finance minister Shaukat Tarin also indicated in June 2021 that the number could be as high as 15 million potential non-filers.
In response to the growing concern of tax compliance and adherence to the provisions of the Income Tax Ordinance, 2001, the FBR issued an official press release.
The FBR aims to enhance tax compliance and promote economic development by issuing the ITGO targeting individuals who do not appear on the active taxpayer list but are obligated to file income tax returns for Tax Year 2023.
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Main features of the ITGO:
The SIM cards linked to the specified individuals’ CNIC will remain blocked until restored by the FBR or the Commissioner Inland Revenue having jurisdiction over the individual.
The PTA and all telecom operators have been instructed to enforce the ITGO with immediate effect.
Telecom operators are mandated to furnish a compliance report to the FBR by May 15, 2024, to provide transparency and accountability in the enforcement process.
