Pakistan regulator moves to block mobile, utility connections of non-filers in bid to expand tax net

A man sits outside a bank along a street in Rawalpindi, Pakistan on July 15, 2023. (AFP/File)

• The move comes as part of restructuring plan by the Federal Board of Revenue to add new taxpayers 
• The FBR has set up 145 district offices aiming to bring up to 2 mln new taxpayers into net till June 2024 

ISLAMABAD: Pakistan’s tax regulator on Friday said it planned to block mobile phone, electricity and gas connections of individuals not filing their statements of wealth despite the issuance of notices, in an effort to expand the tax net.
The development came as part of restructuring measures by the Federal Board of Revenue (FBR), including the establishment of 145 district tax offices that would focus on bringing 1.5 to 2 million new taxpayers into the tax net till June 2024.
The new initiative will help broaden the tax base and ultimately raise the tax-to-GDP ratio to a desired level, according to the FBR. These offices would be headed by district tax officers entrusted with the responsibility of enforcing income tax returns from non-filers and stop filers.
“One of the tools to be utilized for this purpose would be invoking recently introduced section 114B in the Income Tax Ordinance, 2001 which authorizes the department to disconnect utility connections, including electricity and gas connections, and blocking of mobile sims, if return is not filed in response to notices issued,” the FBR said in a statement.
The establishment of these offices will fill a critical tax gap on the path to bring all potential taxpayers into the tax net, according to the regulator.
They will obtain and utilize third-party data, acquired from multiple departments and agencies, that holds “critical information regarding investment in assets and incurring of huge expenditures” by potential taxpayers who have so far managed to escape and stay away from the taxation system, including registration and filing of tax returns.
“Prime Minister has stressed the importance of revenue and increasing the existing number of tax filers during recent meetings,” the FBR said. “Federal Government is committed to utilize all measures and provide assistance to FBR.”
It said a new documentation law was also being introduced to obligate various agencies and departments to provide data to the tax regulator through an automated, common transmission system, for which the FBR has sought assistance from the National Database and Registration Authority (NADRA).