In a recent move aimed at increasing tax compliance, the Federal Board of Revenue (FBR) has affirmed its intention to block the mobile phone SIMs of non-filers of income tax returns for the tax year 2023.
This decision has been made despite the Pakistan Telecommunication Authority’s (PTA) refusal to comply with the FBR’s directives, citing limitations under current legislation.
The FBR has taken this step under the authority granted by the Income Tax Ordinance, 2001, which was enacted by the nation’s lawmakers. This law empowers the FBR to enforce such measures to enhance the country’s tax base.
According to sources within the FBR, a list of approximately half a million non-filers has been compiled. These individuals are targeted in the recently issued Income Tax General Order No 01 of 2024, which mandates the blocking of their mobile SIMs until they file their returns. The order was made public this Tuesday, specifying that these non-filers are required to verify their names against the list available on the FBR website.
Despite the PTA’s opposition, citing its regulatory limitations, the FBR is determined to press forward. The PTA has expressed that it does not have the authority to block or reactivate SIMs directly. However, the FBR maintains that this task falls within the purview of telecom operators rather than the PTA. Consequently, the PTA’s refusal is unlikely to impede the FBR’s efforts.
To ensure compliance, the FBR has scheduled a meeting with all cell phone operators in the country, aiming to enforce the SIM blocking by May 15, 2024. The operators are expected to implement the blocks, and a compliance report is to be furnished to the FBR by the said date.
The measure is seen as a part of broader efforts by the FBR to widen the tax net. With a significant number of economic transactions in Pakistan conducted via mobile phones, including bank transfers and payments, the blocking of SIMs could motivate many to file their returns promptly.
This stringent action has sparked a debate on the balance between enforcing tax laws and respecting individual rights and operational scopes of different government bodies. While the FBR argues that this is a necessary step to prevent tax evasion and ensure that all eligible taxpayers contribute to the national exchequer, critics argue that it might infringe on personal freedoms and could be challenged legally.
The SIM blocking initiative comes in the wake of Pakistan’s efforts to stabilize its economy and improve its fiscal health. By ensuring that more citizens comply with tax regulations, the FBR aims to increase government revenues, which are crucial for public spending and development projects.
As the deadline approaches, those affected have a narrowing window to file their tax returns and have their SIMs unblocked. The move has undoubtedly put the spotlight back on the importance of tax compliance, as the FBR continues to explore various strategies to enforce tax laws in the country. Whether this controversial approach will result in a higher rate of compliance remains to be seen, but for now, it highlights the challenges of tax collection in the digital age.
