Tag: tax base expansion

PM Shehbaz urges FBR to modernise tax system without burdening honest taxpayers

Prime Minister Muhammad Shehbaz Sharif has directed the Federal Board of Revenue (FBR) to implement a strategy using the latest technology to expand the tax base without imposing additional burdens on honest taxpayers.

During his visit to the FBR Headquarters, the Prime Minister underscored the government’s commitment to steering Pakistan towards economic progress and stability.

Prime Minister Sharif highlighted the necessity of collective and individual efforts, sincerity, and sacrifices to prioritise national interests over personal gains.

He described the recent staff-level agreement with the International Monetary Fund (IMF) as a positive development for the country’s economy and expressed optimism that the IMF board would endorse it.

He urged the FBR to work diligently to ensure this IMF programme is the last one needed, paving the way for a prosperous future.

Sharif emphasised the importance of taxing those who evade payments to alleviate the repeated financial strain on honest taxpayers, including government employees. He advocated for leveraging modern technologies, such as artificial intelligence, to digitise FBR operations, which he viewed as crucial for broadening revenue sources without unfairly burdening compliant taxpayers.

The Prime Minister criticised the reliance on foreign debts, stressing that sustainable nation-building requires self-reliance and effective tax collection. He insisted that current FBR reforms be conducted objectively and transparently, prioritising national interests. Sharif also instructed FBR Chairman Malik Amjad Zubair Tiwana to bring any departmental issues to light promptly.

Acknowledging FBR’s success in collecting 30% more revenue compared to the previous year, Sharif insisted that tax enforcement should focus on achieving set targets without causing undue difficulties for compliant businesses and industrialists.

He recalled the introduction of agricultural tax in Punjab 27 years ago, which was subsequently adopted by other provinces, highlighting the need to address general sales tax collection issues.

Upon his arrival at FBR Headquarters, Sharif was welcomed by key government officials, including Finance Minister Muhammad Aurangzeb and Minister of State for Finance Ali Pervaiz Malik. The Prime Minister paid homage to the FBR’s fallen heroes by laying a wreath and offering Fateha. He reiterated that the automation and digitisation of FBR are government priorities and authorised the immediate release of Rs2 billion to enhance the Web-Based One Customs System (WeBOC).

The meeting, attended by several ministers and senior officials, included a briefing on ongoing FBR reforms and the progress of the digitisation strategy.

The Prime Minister was informed of the completion of the first phase of the FBR Tajir Dost Mobile application, which simplifies tax return processes. Additionally, the use of advanced technology has identified approximately 4.9 million potential taxpayers.

Sharif instructed the FBR to expand the tax net to include these identified individuals and to address the legitimate demands of flour mill owners through direct engagement.

July 14, 2024
Non-filers may face bank account suspension, travel bans: FBR

The Federal Board of Revenue (FBR) has issued a stern warning to individuals who have not filed their income tax returns, stating that they could face severe consequences, including the suspension of bank accounts and restrictions on both domestic and international travel via motorways and air travel.

Muhammad Asif, Chief of Broadening the Tax Base (BTB), informed the media that the FBR has initiated a comprehensive nationwide survey of businesses and commercial entities to identify non-filers for registration.

Non-filers are urged to register with their nearest tax office promptly to avoid penalties, fines, utility disconnection, and the suspension of bank accounts.

In extreme cases, non-compliance may lead to restrictions on movement on motorways and at airports.

The FBR, through its countrywide field formations, is actively conducting surveys to gather information on businesses and commercial activities, which will be accessible on the official website soon.

According to official documents, despite Pakistan’s population reaching 240 million, only around 5.2 million individuals are registered in the tax system and filed their income returns in 2022.

The country faces significant challenges in its fiscal landscape, marked by widespread tax evasion, a low tax-to-GDP ratio, and a limited number of tax filers, resulting in insufficient funding for essential public services and critical socioeconomic development initiatives.

Recognising the urgency of expanding the tax base to strengthen the nation’s financial foundation, the FBR has launched a nationwide drive targeting eligible individuals and those with taxable income to register with the tax system and file their income returns. The goal for the current year is to add 1.5 million new taxpayers.

The Director of BTB highlighted that the FBR, through third-party data acquisition, has compiled the financial transaction data of hundreds of thousands of individuals not yet in the tax net.

This information is accessible on the FBR’s website under the title “MALOMAAT,” allowing individuals to review their transactions over the past few years.

The FBR emphasises that it possesses data on nearly all eligible individuals for filing income returns, and non-compliance will be addressed within a few weeks.

According to Brecorder, to avoid penalties, fines, utility disconnection, and travel restrictions, individuals are urged to take advantage of the available time, visit their nearest tax office, and register promptly, as stated by Muhammad Asif.

December 25, 2023
FBR restructuring: 145 offices set up to add 2 million new taxpayers

In a bid to streamline operations, the Federal Board of Revenue (FBR) has set up 145 district tax offices, aiming to bring in 1.5 to 2 million new taxpayers by June 2024.

Highlighting the significance of revenue and the need to increase the number of tax filers, the Prime Minister also stressed these goals in recent meetings.

The initiative is geared towards expanding the tax base, ultimately achieving the desired tax-to-GDP ratio.

Heading these offices are district tax officers responsible for compelling income tax returns from non-filers and preventing lapses from existing filers.

This marks a pivotal step in bridging the critical tax gap and incorporating all potential taxpayers into the system.

The newly established offices, led by dedicated Inland Revenue Officers in BS-17/18, will leverage third-party data obtained from various departments to track information on asset investments and significant expenditures by potential taxpayers.

This approach aims to curtail avenues for individuals evading taxation, particularly in terms of registration and filing returns.

The department will invoke the recently introduced Section 114B in the Income Tax Ordinance, 2001, to enforce compliance, enabling it to disconnect utility connections (such as electricity and gas) and block mobile SIMs if returns are not filed in response to issued notices.

A new documentation law is also in the works to mandate agencies and departments to provide data to the FBR through an automated common transmission system.

The Federal Board of Revenue has sought collaboration with the National Database and Registration Authority (NADRA), and the Chairman of NADRA is ensuring assistance for the expansion of the tax base through data integration.

This comprehensive initiative not only strengthens the FBR’s capacity to enforce tax laws but also facilitates taxpayers by establishing dedicated offices, ultimately fostering a more efficient and effective taxation system.

November 19, 2023
Govt targets non-filers with 0.6% tax on cash withdrawals more than Rs50,000

The federal government has announced the implementation of a flat 0.6 per cent tax for individuals who are not listed on the Federal Board of Revenue’s (FBR) Active Taxpayer List (ATL). This taxation policy, as outlined in the budget documents, aims to facilitate the documentation of the economy.

As per the official document, the government has chosen to impose a tax rate of 0.6 per cent on cash withdrawals exceeding Rs50,000.

The primary objective behind this initiative is to record the cash withdrawal data of individuals who are not on the ATL and encourage them to increase their transactional expenditure. The intention is to attract more individuals to become part of the tax system.

It is important to note that this legislation was previously in effect but was repealed by the previous administration through the Finance Bill 2021. However, certain significant measures introduced under the Finance Act 2022 to address non-compliance were not effectively enforced.

Consequently, the government has now made the decision to strictly enforce these measures in order to enhance the country’s tax revenue.

June 9, 2023