The Pakistani government is set to introduce stricter regulations aimed at boosting tax compliance and expanding the taxpayer base. As part of the Tax Law Amendment Bill for 2024-25, the government is taking a tough stance on non-filers—those who fail to submit tax returns—by restricting their ability to purchase high-value assets and carry out certain financial activities.
Key Measures in the Bill:
- Car Purchases: Non-filers will face restrictions on buying cars with engines above 800cc. However, they will still be allowed to purchase motorcycles, rickshaws, and tractors.
- Property Deals: There will be limitations on the property transactions non-filers can make, particularly for high-value properties.
- Stock Market Investments: Non-filers will also face restrictions on how much they can invest in the stock market, effectively limiting their participation in financial markets.
- Banking Activities: New rules will prevent non-filers from opening bank accounts or making transactions above certain thresholds.
- Unregistered Businesses: Business owners who aren’t registered with the tax authorities will have their bank accounts frozen. Additionally, they will be prohibited from transferring property, and the government has the power to seal their businesses and assets.
Why This Matters:
These measures are designed to push more individuals and businesses to register for taxes, which will help increase Pakistan’s tax-to-GDP ratio, aiming to raise it from 9% to 13%. The Federal Board of Revenue (FBR) will publish a list of individuals whose accounts will be frozen due to non-registration. These accounts will be unfrozen within two days once the individual registers for sales tax.
The government’s goal is to strengthen the economy by ensuring that all sectors contribute their fair share to the national revenue. By implementing these restrictions, Pakistan aims to reduce tax evasion and foster a more equitable tax system.
For businesses, especially those that are unregistered, these new rules could disrupt operations unless they quickly comply with tax registration. Meanwhile, for individuals, the inability to access financial services or make major purchases could be a powerful incentive to become part of the tax system.
This move highlights the government’s commitment to tax reforms and creating a more transparent, compliant economic environment.