Bill tabled in NA to make life difficult for tax dodgers

ISLAMABAD: The federal government has unveiled a bill designed to combat tax evasion, proposing severe restrictions on bank account operations, property transfers and economic activity for non-compliant individuals and businesses.

Finance Minister Muhammad Aurangzeb introduced the Tax Law (Amendment) Bill 2024 in the National Assembly on Wednesday, according to which non-filers would be barred from purchasing cars above 800cc and opening bank accounts. However, they would be allowed to buy motorcycles, rickshaws and tractors. The non-filers would not be allowed to buy property beyond a certain limit. They would not be able to make transactions beyond a certain limit. Bank accounts of the non-registered business persons would be frozen and they would be banned from transferring property. However, their accounts will be unfrozen two days after the registration. Filer’s parents, spouse and children under 25 years of age would also be considered filers and they would not be required to submit returns.

According to a clause of the Tax Law (Amendment) Bill 2024, which amends the Income Tax Ordinance, 2001, the Federal Board of Revenue (FBR)’s Inland Revenue chief commissioner would also have powers to seal the business premises, seize moveable property, or appoint a receiver for the management of the taxable activity if person fails to get himself under the tax law. There would be restrictions on economic transactions like motor vehicle manufacturing companies would not entertain the request of a tax evader for the purchase of a vehicle. An application for registration of a vehicle from an ineligible person would also not be processed by the registering authority of the Excise and Taxation Department.

An ineligible person is a person who has not filed a return of income for the tax year immediately preceding the year of the transaction and does not have sufficient resources in the wealth statement in the case of an individual, or financial statement in the case of a company or an association of persons. The IR commissioner would have the powers to direct banking companies, scheduled banks and other financial institutions, through an order in writing, to bar the operation of the bank account of any person who fails to get registered for this Act. He could also direct the property registering authority to bar the transfer of immovable property of any person who fails to get registered.

The aggrieved person, however, can file an appeal with the commissioner within 30 days of receipt of commissioner’s decision. The FBR may share information on turnover, income including taxable income, for one or more tax years, identification data including bank account numbers declared in the income tax return, wealth statement, financial statement or in any other document to the board, in respect of persons or classes of persons, along with data-based algorithms, as may be prescribed, with scheduled banks in Pakistan.

Any application or request by any ineligible person, to any authority responsible for registering, recording or attesting transfer of any immovable property, more than such value in aggregate in a tax year as may be notified by the board from time to time, would not be accepted or processed by. Any person, authorised to sell securities including debt securities or units of mutual funds, including a person authorised to open and maintain an account or clear such transactions, would not sell, open an account or clear the sale of securities, mutual funds, to an ineligible person being an individual or an association of persons. A banking company would not open or maintain an already opened current or a saving bank or investor portfolio securities account, except an Asaan account, in the name of such persons as may be notified by the board. The bank company would also not allow cash withdrawal from any of the bank accounts of any person, exceeding the amount as may be notified by the FBR from time to time

The purpose of the bill is to give effect to the proposals for effective compliance with the tax laws and to ensure that taxes are paid according to income and consumption level, to complete the value chain of businesses and generate financial resources for economic development, as proposed by the federal government. The National Assembly, meanwhile, passed the National Forensics Agency Bill 2024, which has already been passed by the Senate. The bill, moved by the Minister for Interior Syed Mohsin Naqvi, is aimed at the creation of the National Forensics Agency to enhance forensic capabilities across Pakistan.

Key initiatives include upgrading existing conventional forensic labs and establishing a digital forensic lab that would provide services to all provinces, Gilgit-Baltistan, and government, and private forensics labs. The National Forensics Agency would integrate digital and cyber forensics to combat crimes involving electronic devices, deepfakes and other electronic offences. Moreover, it would also develop a centre of excellence and a research and development department to make it a self-sustainable agency. Furthermore, it would envisage developing indigenous solutions to minimise the dependence on foreign governments and agencies.