By Staff Reporter
ISLAMABAD: Pakistan’s telecom operators have reached an agreement with the Federal Board of Revenue (FBR) to block mobile phone SIMs of individuals who haven’t filed their tax returns, ending a week-long standoff with the tax authorities.
The understanding was reached after a series of meetings between the FBR, Pakistan Telecommunication Authority (PTA), and telecom operators on Friday to implement Income Tax General Order No. 1, issued under Section 114 B of the Income Tax Ordinance 2001.
The telecom operators agreed to initiate the manual blocking process in small batches of non-filers. The FBR had released a list of 506,671 individuals who failed to file their tax returns for 2023, and as a penalty, their mobile phone SIMs will be blocked. However, telecom providers had objected to the decision and delayed its execution.
“After several deliberations, the telecom operators have agreed to initiate the manual blocking process in small batches until their systems are fully equipped to automate it,” the FBR said in a statement.
“In this regard, the first batch comprising 5000 non-filers has been communicated to the telecom operators today for compliance regarding SIM blockage.”
Subsequent batches will be sent to telecom operators on a daily basis, according to the FBR. The operators have also started sending messages to non-filers regarding blocking of their connections.
The tax authorities have identified 2.4 million potential taxpayers who did not exist on the tax rolls, and notices were issued to these individuals. Pakistan’s narrow tax base and enduring tax evasion issue have often led to the problem of insufficient revenue collection. The shortfall exacerbates the government’s tendency to run a high fiscal deficit, often financed through domestic and international borrowing.
In December, the FBR said the country had a “very narrow tax base” of around 5.2 million people in 2022, out of a population of 240 million people and it had planned to add 1.5 million new taxpayers to the existing base during this fiscal year.
The tax authorities received 4.2 million taxpayers until March 1, as against 3.8 million returns received over the corresponding period of last year, showing a marginal increase during the period under review.
Pakistan, which has been facing an economic meltdown, is also making efforts to introduce structural economic reforms. The South Asian country has to meet a primary budget deficit target of Rs401 billion ($1.44 billion), or 0.4 percent of its gross domestic product, for the current fiscal year before the government presents its budget in June.
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