The government is contemplating new measures to enforce tax compliance and amend taxation policies as part of the amended Finance Bill 2024.
Among the key proposals is the potential blocking of bank accounts for non-filers of tax returns, and changes to the sales tax on mobile phone imports.
According to informed sources, the proposal to freeze bank accounts of non-filers was initially included in the original Finance Bill 2024 but was not passed. Under the new plan, if non-filers do not respond to tax notices, their bank accounts may be blocked until they are listed on the Active Taxpayers List (ATL).
Non-filers would still be able to deposit money into their accounts but would be prohibited from withdrawing funds until they comply with filing requirements and their names appear on the ATL.
The Federal Board of Revenue (FBR) will issue an income tax general order (ITGO) listing the names of non-filers whose accounts are to be blocked if this proposal is incorporated into the amended Finance Bill 2024.
Additionally, the amended Finance Bill 2024 proposes replacing the current 18 percent sales tax on imported mobile phones with a fixed sales tax amount, which will vary depending on the brand of the imported phones.
The government is also revising the policy on disallowance of sales promotion and advertising expenses. In the 2024-25 budget, 25 percent of these expenses under royalty arrangements were disallowed. The government is now considering three options to amend this policy.
Firstly, the FBR may reduce the disallowance rate from 25 percent to 20 percent, subject to specific conditions being met. Secondly, the FBR could restore the original status of the law prior to the Finance Bill 2024, which would grant the FBR the authority to create rules for handling such cases.
Lastly, the government might permit a certain percentage of sales promotion and advertising expenses to be allowed.
These proposed changes aim to improve tax compliance and adjust tax policies to better suit economic conditions and business needs. The final decisions will be confirmed once the amended Finance Bill 2024 is formally presented and approved.
