Islamabad, Pakistan: The Federal Board of Revenue (FBR) in Islamabad is set to introduce measures allowing Inland Revenue officials to seal the premises of unregistered companies, restrict financial activities, and prohibit the opening of new bank accounts for non-compliant entities. These steps, outlined in a proposed tax bill, aim to ensure adherence to tax laws and promote transparency in income and consumption-based taxation. Implementation of these measures will require prior government approval.
The Tax Laws (Amendment) Bill 2024 suggests mapping financial transactions against declared cash and assets in income tax returns. Taxpayers will still be allowed to acquire vehicles, property, or conduct financial transactions in the names of family members whose declared assets align with their filings. Immediate family members, such as parents, spouses, and dependent children, are categorized as eligible for these transactions, provided specific conditions, such as declared sources of funds, are met.
To encourage compliance, the bill introduces new provisions in income and sales tax laws. These include empowering tax commissioners to hire experts and auditors to accurately assess tax collections and defining categories of eligible persons for financial transactions. Eligible persons must demonstrate sufficient resources, calculated as 130% of their declared cash-equivalent assets in their latest tax returns. For businesses, this would be based on financial statements attached to tax filings.
Restrictions are also proposed for economic activities involving ineligible individuals. These include barring the processing of vehicle bookings or registrations and the transfer of immovable property exceeding FBR-notified values. The sale of securities, such as mutual fund units or debt securities, will also be prohibited for ineligible persons.
Additionally, banks will face restrictions on account openings and cash withdrawals for individuals deemed ineligible. Exceptions apply for basic accounts or transactions below limits set by the FBR, which will notify these thresholds periodically. The purchase of rickshaws, small-capacity vehicles, and tractors, along with financial transactions involving declared loans or inheritance, will remain exempt from these restrictions.
Non-residents and public companies are also exempt from these measures. The FBR will not pursue cases related to concealed assets if disclosures are made concerning remittances or inherited funds. These initiatives aim to enhance tax compliance while accommodating legitimate financial activities within a structured regulatory framework.