Pakistan’s Senate Standing Committee on Finance has taken a significant step to encourage tax compliance by proposing a travel ban and utility disconnections for individuals who fail to file their income tax returns.
Under the new measures, individuals who haven’t filed their tax returns may be banned from traveling abroad. This move aims to encourage tax compliance and boost government revenue collection.
There will be exceptions, however. Travelers performing Hajj or Umrah pilgrimages, young children, students, and overseas Pakistanis with valid NICOP cards will not be subject to the travel restriction.
Beyond Travel: Utility Disconnections Planned
The crackdown on non-filers goes beyond travel restrictions. The proposal also includes the possibility of disconnecting their mobile phone SIM cards, electricity, and gas connections. This multi-pronged approach emphasizes the seriousness of tax compliance in Pakistan.
Senator Farooq H. Naik, a committee member, compared the situation to being placed on a travel blacklist. He also pointed out that non-filers already face harsher consequences, including higher withholding tax rates and the risk of suspended mobile phone services and business operations.
The measures aren’t just aimed at casual tax neglect. The Federal Board of Revenue (FBR) chairman revealed that the list of non-filers includes individuals with an annual income exceeding Rs. 2 million who previously filed tax returns. Additionally, those who file tax returns solely to purchase assets like cars or houses may face additional taxes if they haven’t consistently filed returns.
