KARACHI: The Pakistani government is reportedly planning stringent measures against individuals not filing tax returns, with a potential ban on non-filers from purchasing immovable property and motor vehicles expected to be a key feature of the upcoming budget for the fiscal year 2025-26.
Sources familiar with the ongoing budget discussions have indicated that the proposed restrictions aim to significantly curtail the economic activities of non-filers. Beyond limiting major asset purchases like property and cars, broader restrictions on financial transactions are also under consideration.
Officials at the Federal Board of Revenue (FBR) have confirmed that the government’s policy direction is towards tightening, rather than easing, the conditions for non-compliant taxpayers in the next fiscal cycle. This move aligns with a broader strategic objective to gradually eliminate the “non-filer” category from the tax system altogether.
This aligns with recommendations from the International Monetary Fund (IMF), which has emphasized the need for Pakistan to expand its tax base and improve overall tax compliance as part of ongoing program discussions.
Providing context for the intensified focus on compliance, authorities have reportedly briefed the IMF on the performance of various tax initiatives. It was noted that previous schemes designed to facilitate tax compliance among traders did not achieve their intended revenue targets.
However, a recent measure involving increased withholding tax on unregistered shopkeepers has shown promising results, leading to a reported 51 percent increase in the number of registered filers within the trader and wholesale sectors.
In anticipation of stricter enforcement, the FBR is actively analyzing third-party data to identify tax defaulters and is implementing structural reforms within its compliance mechanisms. The FBR has already operationalized its Compliance Risk Management System in major urban centers, including Islamabad, Karachi, and Lahore.
This system, designed to identify and flag non-compliant behavior, has also been extended to cover corporate tax units, indicating a comprehensive push towards greater tax discipline across various segments of the economy.
The proposed measures underscore the government’s increasing commitment to bringing more individuals and businesses into the tax net and ensuring equitable tax contributions.
