Pakistan’s new tax law has empowered authorities to block mobile phones, cut utilities who fail to file their income tax returns

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Pakistan’s new tax law has empowered authorities to block the mobile Phones, Electricity and gas connection of person who fail to file their income tax returns.

Tax Law(Third Amendment) ordinance 2021, promulgated by President Arif Alvi earlier this week bounds the National Database and Registration Authority (NADRA) to share its records and any relevant information with the federal Board of Revenue (FBR) as Pakistan aims to broaden the tax net from around 2.9 million filers to 3.5 million by 2023.

“The income Tax general order issued under sun-section (1) may entail any or all of the following consequences for the persons mentioned there in;

Disabling of Mobile phones or Mobile Phone sims; Discontinuance of gas connection,” the ordinance says.

The ordinance imposes a penalty of 0.1 percent of the tax payable in respect of the tax year for each day of default or RS 1,000 per day of default. The penalty would be reduced by 75 percent, 50 percent and 25 percent if the return is filed within one, two and three months respectively after the due date or extended due date of filing of return as prescribe under the law, according to the ordinance.

The law also increases the amount of penalty for tier-1 retailers who are not integrated with the FBR and imposes an additional advance tax of between 5 percent and 35 percent on professionals using domestic electricity connections.

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