Pakistan proposes to restrict non-filers from buying cars and property, having bank accounts

Pakistan’s tax authority is set to bar non-filers from purchasing cars, property, or equity securities, and from opening bank accounts, except for Asaan accounts.

Pakistan's Finance Ministry has finalized the bill of Tax Laws (Amendment) Act, 2024 proposing amendments to tax laws that would grant additional powers to the Federal Board of Revenue (FBR) and tighten restrictions on non-filers.

Finance Minister Muhammad Aurangzeb has presented the bill before National Assembly on Wednesday.

The bill also proposes that the Inland Revenue Commissioner be empowered to instruct banking companies, scheduled banks, and other financial institutions to block the bank accounts of individuals who fail to register with the tax authority.

Additionally, the commissioner would have the authority to direct property registering authorities to prevent the transfer of immovable property for unregistered individuals. The Chief Commissioner would be granted powers to seal business premises, seize movable property, or appoint a receiver to manage the taxable activities of non-compliant persons.

The bill stipulates that the applications from ineligible persons for booking, purchasing, or registering motor vehicles will not be accepted by manufacturers or vehicle registering authorities.

Similarly, applications for the transfer of immovable property exceeding a certain value, as notified by the Board, will be rejected.

Furthermore, the bill mandates that authorized sellers of securities, including debt securities and mutual fund units, will not conduct transactions with ineligible persons.

Banking companies will be prohibited from opening or maintaining current or savings accounts, except for Asaan accounts, for such individuals.

Banks will also be required to disallow cash withdrawals exceeding a notified amount from any accounts held by non-compliant persons.

The FBR will be authorized to share information on turnover, income, and identification data, including bank account numbers declared in income tax returns, with scheduled banks. These banks will, in turn, provide the FBR with particulars of accounts where banking information deviates from the prescribed data algorithms.

The government missed its five-month tax target by Rs356 billion. The Federal Board of Revenue (FBR) aimed to collect Rs4.64 trillion but only managed Rs4.28 trillion by the end of November. This marks a growth of less than 23%, while the target was 40%.

As part of an agreement with the IMF, the government aims to achieve sustainable public finances through gradual fiscal consolidation.

This involves broadening the tax base, removing exemptions, and increasing resources for critical development and social spending.

The authorities plan to raise tax revenues by 1.5% of GDP in FY25 and 3% of GDP over the 37-month Extended Fund Facility.

The FY25 budget targets a general government primary surplus of 1% of GDP (2% in headline terms). Revenue collections will be supported by simpler and fairer direct and indirect taxation, including properly taxing net income from the retail, export, and agriculture sectors.