Govt Looking to Double Tax on Offshore Digital Services and Tougher Penalties for Fraud

The federal government is considering major changes to the Tax Laws Amendment Bill 2024 like imposing a 20 percent income tax on offshore digital services, a 10-year jail term for sales tax fraud, and granting junior revenue officers greater authority to arrest suspects without prior approval. With this, the income tax rate on fees for offshore digital services would double from 10 percent to 20 percent for gigs like online advertising, website maintenance, e-commerce, and email marketing aimed at Pakistani users, reported Express Tribune. Penalties for tax fraud might become stricter, with offenders facing up to 10 years in prison and fines of up to Rs. 10 million. Tax fraud would include underreporting taxes, falsifying invoices, and overstating refunds. The government has also proposed a new definition of “abettor” to include anyone aiding or conspiring in tax fraud, subject to the same penalties. Junior FBR officers may be empowered to arrest suspects in tax fraud cases without prior approval, provided post-arrest oversight is conducted. To prevent suspects from fleeing the country, FBR officers may also request that individuals under investigation for tax fraud be placed on the Exit Control List (ECL). Restrictions on non-filers will likely increase further. While non-filers are already barred from purchasing homes and cars, the latest amendments propose prohibiting them from buying agricultural tractors. The National Assembly Standing Committee on Finance is scheduled to discuss the Tax Laws Amendment Bill 2024 today.