Pakistan's Federal Board of Revenue (FBR) has intensified its efforts to combat tax evasion by implementing measures to block the mobile phone SIM cards of over 500,000 individuals who failed to file their tax returns for the year 2023. The decision, outlined in an Income Tax General Order (ITGO) issued by the FBR, mandates the blocking of SIM cards until they are restored by either the FBR or the Commissioner Inland Revenue.
The FBR's directive instructs the Pakistan Telecommunication Authority (PTA) and all telecom providers to promptly execute the ITGO and report compliance by May 15. This move comes after the FBR identified 2.4 million potential taxpayers who were not on the tax rolls, subsequently issuing notices to these individuals.
Out of the identified group, over 500,000 individuals were selected for SIM card blockade based on the criterion of having declared taxable income in one of the past three years but failing to file returns for the tax year 2023. Despite this enforcement action, the FBR has seen a marginal increase in the number of taxpayers, with approximately 4.2 million taxpayers recorded by March 1, 2024.
The process for restoring SIM cards is streamlined, with automatic restoration for individuals who file tax returns for 2023. The FBR updates its Active Taxpayers List (ATL) every Monday, and names from the ATL list are submitted to the PTA and telecom companies for restoration every Tuesday, with no separate restoration procedures required.
The blockade of SIM cards represents a novel approach by the FBR to incentivize tax compliance among low-income individuals and expand the tax base. This strategy aligns with the FBR's broader campaign to broaden the tax base and encourage regular tax filing. Additionally, the introduction of high withholding tax rates for non-filers aims to discourage tax evasion and promote compliance among taxpayers.
