Federal Government Considers Major Reforms in Tax Laws Amendment Bill 2024
The federal government is deliberating significant changes in the Tax Laws Amendment Bill 2024, which includes measures aimed at tightening tax regulations and penalties. The proposed reforms encompass a range of issues, including income tax rates, tax fraud penalties, and the authority of revenue officers.
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Key Proposed Changes:
- 20% Income Tax on Offshore Digital Services: The bill proposes to increase the income tax rate on offshore digital services, such as online advertising, website maintenance, e-commerce, and email marketing targeting Pakistani users. The tax rate would double from 10% to 20%.
- Stricter Penalties for Tax Fraud: Offenders involved in tax fraud may face up to 10 years in prison and fines of up to Rs. 10 million. Fraudulent activities like underreporting taxes, falsifying invoices, or overstating refunds would fall under this category. A new definition of “abettor” will include anyone involved in aiding or conspiring in tax fraud, subjecting them to the same penalties.
- Increased Authority for Junior FBR Officers: Junior officers of the Federal Board of Revenue (FBR) may be granted greater powers to arrest suspects in tax fraud cases without prior approval, with post-arrest oversight. To prevent suspects from fleeing the country, FBR officers may request that individuals under investigation be added to the Exit Control List (ECL).
- Restrictions on Non-Filers: The amendment also seeks to impose stricter restrictions on non-filers, who are already barred from purchasing homes and cars. The new amendments could extend this restriction to prevent non-filers from purchasing agricultural tractors.
The National Assembly Standing Committee on Finance is set to discuss the Tax Laws Amendment Bill 2024 today, and these reforms, if approved, could significantly alter Pakistan’s tax landscape, focusing on stricter enforcement and expanded reach.
