The federal government is considering significant amendments to the Tax Laws Amendment Bill 2024, including a 20% income tax on offshore digital services, stricter penalties for tax fraud, and expanded powers for junior revenue officers to arrest suspects without prior approval.
Under the proposed changes, the income tax rate on fees for offshore digital services would increase from 10% to 20%. This would apply to services such as online advertising, website maintenance, e-commerce, and email marketing targeting Pakistani users, according to a report by The Express Tribune.
Stricter Penalties for Tax Fraud
The amendments propose harsher penalties for tax fraud, with offenders facing up to 10 years in prison and fines of up to Rs. 10 million. Tax fraud would include offenses such as underreporting taxes, falsifying invoices, and overstating refunds. Additionally, the government has introduced a broader definition of “abettor,” which would include anyone aiding or conspiring in tax fraud. Abettors would face the same penalties as primary offenders.
Expanded Powers for Junior FBR Officers
Junior officers of the Federal Board of Revenue (FBR) may be granted greater authority to arrest suspects in tax fraud cases without prior approval, provided there is post-arrest oversight. To prevent suspects from fleeing the country, FBR officers could also request that individuals under investigation for tax fraud be placed on the Exit Control List (ECL).
Increased Restrictions on Non-Filers
The proposed amendments also aim to tighten restrictions on non-filers. While non-filers are already prohibited from purchasing homes and cars, the new changes would extend this ban to include the purchase of agricultural tractors.
Next Steps
The National Assembly Standing Committee on Finance is set to review and discuss the proposed amendments to the Tax Laws Amendment Bill 2024 today. If approved, these changes could have far-reaching implications for taxpayers, digital service providers, and the enforcement of tax laws in Pakistan.
