FBR Cracks Down on Tax Evasion with Hefty 90% Tax on Non-Filers

In a significant move to crack down on tax evasion, the Federal Board of Revenue (FBR) of Pakistan to impose a staggering 90% additional withholding tax on over half a million individuals who have not filed their income tax returns. This rate is a substantial increase from the standard 15% withholding tax rate.

The FBR has recently issued a general order on income tax, unveiling a list of more than 570,000 non-filers who will be subject to this hefty tax until they comply and file their returns. This decision is expected to have a profound impact on prepaid and postpaid mobile users in Pakistan who have not fulfilled their tax filing obligations.

Under this new regime, a 90% withholding tax will be automatically deducted from the mobile balance of non-filers. For example, if a user loads a balance of 100 Pakistani rupees, a staggering 90 rupees will be deducted and forwarded to the FBR.

The repercussions extend further. If telecom companies block the SIMs of these non-filers and they still fail to file their income tax returns, they will face a 90% additional tax on any other mobile phone SIM they acquire and use.

Whenever non-filers recharge their mobile balance or purchase data packages, they will be subject to this additional 90% tax. The data required to identify and block the SIMs of non-filers has already been shared with the Pakistan Telecommunication Authority (PTA) and telecom companies.

Telecom operators in Pakistan are now racing against the clock, with only a few days remaining to block the SIMs of more than 570,000 non-filers identified by the FBR. This move is part of the FBR’s ongoing efforts to broaden the tax net, increase compliance, and combat tax evasion in the country.

Non-filers in Pakistan are individuals who have not filed their income tax returns despite being obligated to do so. This category includes individuals earning above the taxable income threshold, self-employed professionals, business owners, and others who meet the criteria for filing tax returns but have failed to comply with the legal requirements.