Karachi, September 12, 2024 – The Federal Board of Revenue (FBR) has planned a comprehensive crackdown on individuals who are registered as active taxpayers but have failed to contribute any taxes.
This decisive move is driven by the need to address a growing shortfall in revenue collection and aims to boost government funds to meet fiscal demands.
According to FBR sources, the agency has identified around two million “nil filers” among the six million registered taxpayers. These individuals file tax returns indicating no taxable income, yet many of them are suspected of earning substantial incomes. To combat this tax evasion, the FBR is preparing to implement severe punitive measures, which could include freezing bank accounts, restricting the purchase of properties and vehicles, and even disconnecting utility services for repeat offenders.
One of the major proposals put forward by the FBR is the categorization of non-payers into three tiers based on the severity of their tax evasion. This would allow for targeted actions, ensuring that the consequences are proportionate to the level of evasion. For instance, individuals who submit incorrect or incomplete returns could face a hefty fine of up to Rs1 million. However, such measures would need parliamentary approval through either a mini-budget or an ordinance to be enforced.
Those who fail to file any returns at all will face the harshest penalties, including frozen bank accounts and restrictions on purchasing high-value items like real estate or vehicles. The FBR is also considering disconnecting electricity and gas services for those evading taxes between Rs0.5 million and Rs1 million. These actions reflect a serious attempt by the government to close loopholes and address the prevalent culture of tax evasion in Pakistan.
To further enhance enforcement, the FBR is looking to implement advanced technological solutions, including artificial intelligence (AI) and third-party monitoring. By increasing transparency and using AI to audit returns, the FBR hopes to identify discrepancies more effectively and crack down on inaccurate tax filings.
The urgency of these measures stems from a substantial tax shortfall of over Rs220 billion in the first quarter of the current fiscal year. The government had set an ambitious annual target of Rs12,970 billion, and missing this goal could have serious repercussions. The International Monetary Fund (IMF) has already been closely monitoring Pakistan’s revenue collection efforts as part of the country’s financial assistance program, and a continued shortfall may lead to further pressure from the IMF for additional taxation measures.
In response to these challenges, the FBR has made it clear that instead of imposing additional taxes on compliant taxpayers, it will focus on penalizing those who are evading their financial responsibilities. These measures are seen as critical steps to ensure that all citizens pay their fair share, thereby reducing the burden on the economy and helping Pakistan meet its fiscal goals.
