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October 24, 2024FBR to Block SIMs and Utilities for Non-Filers in Pakistan

If you’re a taxpayer or someone who’s been putting off filing taxes, the Federal Board of Revenue (FBR) in Pakistan is rolling out some big changes that you should definitely pay attention to. Starting in January 2024, the FBR is stepping up its efforts to bring non-filers into the tax net, and it’s not just about sending warnings anymore. They’re planning to block mobile phone SIMs and cut off utility connections (like electricity and gas) for non-filers. Yes, it’s happening. Here’s what you need to know.
What’s the Deadline?
The FBR has already issued notices to non-filers, and the last date to respond is October 30, 2024. If you’re on that list, make sure to file your taxes by that date. After this, the FBR will release a general order naming individuals who haven’t complied. If your name is on that list, expect your utilities and mobile SIMs to be disconnected soon after 30 October 2024.
What’s the Impact?
For non-filers, it’s a wake-up call. Blocking SIMs and cutting off utilities is a serious move, and it will definitely push many to get their taxes in order. It’s also aimed at broadening the tax base. The FBR hopes to add around 1.5 million new filers as a result of this enforcement action. However, there are some challenges. In cases where the utility bills are in the name of a family member (like a father), but the user is the actual non-filer, the FBR will need to find a way to address this.
Current Tax Collection Status
The FBR’s revenue collection for the first half of the fiscal year (July-December 2023-24) has already surpassed expectations. They’ve collected Rs4,456 billion, which is Rs31 billion more than the target. The second half of the fiscal year looks promising as well, with the FBR aiming to collect Rs 975 billion by the end of December 2023.
Why Should You Care?
For individuals and businesses who haven’t filed their taxes, this move will have immediate consequences. Losing access to your phone services and utilities could disrupt both personal life and business operations. For tax professionals, financial advisors, and corporate professionals who handle tax matters, this change means you need to stay updated on deadlines and help your clients avoid penalties.
What’s Changing in Tax Collection?
The FBR has been working on reducing its reliance on withholding taxes and focusing more on direct tax collection. The share of withholding taxes indirect taxes has dropped significantly, while the share of direct taxes has gone up. This means the FBR is pushing hard on audits and assessments to ensure compliance.
On a positive note, the FBR has increased tax refunds too, paying out Rs230 billion in refunds during July-December 2023-24, up from Rs177 billion during the same period last year. For businesses, this means getting your tax filings in on time could lead to faster refunds.
Upcoming Reforms and Digital Projects
There’s more on the horizon. The FBR is also launching a pilot project in January 2024 for digital invoicing in the fast-moving consumer goods sector. This will help with transparency and ensure compliance with electronic sales tax systems. Additionally, there’s talk of setting up a separate Customs Board from the Inland Revenue Service, which could streamline operations further.
The Bottom Line
For non-filers, time is running out. Ignoring your tax obligations could mean losing your access to basic services like electricity, gas, and phone communication. For businesses and corporate professionals, this is a crucial time to ensure compliance and avoid any penalties that could affect operations. The FBR is serious about expanding the tax base and ensuring that tax laws are enforced. If you’re in Pakistan and haven’t filed yet, now’s the time to take action.
Stay informed, stay compliant, and keep track of the deadlines. The tax landscape in Pakistan is evolving quickly, and missing out could cost you more than just a fine—it could disrupt your entire life.