Tax non-filer in Pakistan


By Anthony Williams

“Hey, Stella”, This iconic line is shouted, multiple times, by Stanley Kowalski, played by Marlon Brando, in A Streetcar Named Desire (directed by Elia Kazan, 1951). Kowalski’s character says it in the original play, too. Back when Marlon Brando was hot, he played hot-blooded Stanley Kowalski in A Streetcar Named Desire. Stanley isn’t subtle. So when he wants Stella back, what does he do?

Write her a nice note? Apologise? No, he stands in the street, screaming like a madman—”HEY, STELLA!”. The purpose of this article is to precisely define the term “tax non-filer” accordingly to the income tax law(s) of Pakistan and to maybe give rest to the present day government, standing in the street & screaming – “Hey, tax non-filer”. Black’s Law Dictionary defines a filer as “A party that files an official document at its office or deposit place”. So, tax non-filer means SOMEONE, who has to file his/her annual income tax return with the Federal Board of Revenue (FBR) online at Iris but does not do it.  No, not really because of the legal maxim “No taxation except by express words” – Secy. to Commr. Salt v. Ramanathan Chetti, minor by guardian [1 ITC 37 (Madras)], including filing of tax return. So it’s the duty of the legislator (Parliament) to clearly mention the type of individuals, businesses and governments that have to perform different duties under the Income Tax Ordinance 2001. So, the Government cannot say “That somebody is a tax non-filer”, rather it has to clearly define it in the tax law, so that you and I as Pakistani citizens exactly know, when we are a tax filer and when we are not. Because, the question that needs to be asked that nobody is asking “Can I remain a tax non-filer and not violate/break any tax laws & rules” and then a follow up question “If yes, then why am I being penalised for being a tax non-filer?”.

Let’s examine the definitions of these terms, as given in the Income Tax Ordinance 2001; the tax code of Pakistan. Section 2(23A) (Tax) “filer” means a taxpayer whose name appears in the active taxpayers’ list issued by the Board [or Azad Jammu and Kashmir Council Board of Revenue or Gilgit-Baltistan Council Board of Revenue] from time to time or is holder of a taxpayer’s card; and Section 2(35C) (Tax) “non-filer” means a person who is not a filer. As you can see these definitions are procedural in nature, rather than descriptive. To see who gets to be put on the Active Taxpayers List (ATL), we need to review the rules of the Board (FBR) titled Income Tax Rules, 2002. According to rule 81B-Active Taxpayers List-1) This rule shall apply for the purposes of clauses (23A) and (35C) of section 2 (as mentioned above) and section 181A reproduced here [181A. Active taxpayers’ list. — (1) The Board shall have the power to institute active taxpayers’ list. (2) Active taxpayers’ list shall be regulated as may be prescribed.] Back to rule 81-B, 2) The Board shall publish Active Taxpayers List, hereinafter referred to as ATL, comprising persons who meet the criteria as laid down under sub-rule (4) and shall be made available on the Board’s web portal, by first day of March in each financial year: (3)  ATL published in any financial year shall be valid for the period beginning on the date of publish and ending on last day of February, next following year[:] (4)  ATL shall be updated on [every Sunday at 24:00 hours], hereinafter referred to as updation date. (5) A person’s name shall be included in ATL, if the person has filed a return under section 114 or a statement under section 115 for the tax year for which the last date as specified in section 118 falls during immediately preceding twelve month[:] (6) In case a joint account is held in a bank by more than one person, the joint account holders as an entity shall be deemed to have met the criteria as laid down under sub-rule (5), if any of the persons in the joint account meets the criteria as laid down under the said sub-rule (5).  (7)  In case an account is held in a bank in the name of a minor, the minor shall be deemed to have met the criteria as laid down under sub-rule (5), if the parent, guardian or any person who has made deposits in the minor’s account meet the criteria as laid down under said sub-rule (5). (8) A person’s name shall be included in ATL on the: immediately following updating date, if at any time the criteria as laid down under sub-rule (5), is fulfilled by that person.

So, a person who files his/her tax return for the previous year becomes a tax filer on the next Monday. Our Finance Minister, Asad Umar recently re-introduced the ban on purchase of vehicles and property (above 5 million rupees) for tax non-filers; so many Pakistani citizens and overseas Pakistanis are becoming tax filer. But the question remains, who is a “tax non-filer”, lets see how the Supreme Court of Pakistan have interpreted the phrase “tax non-filers”. In the Constitutional Petition No.35 of 2016, Muhammad Hanif Abbasi vs Imran Khan Niazi and Others (P L D 2018 Supreme Court 189), our Honourable Chief Justice Mian Saqib Nisar writes in his judgement about the subject matter before the honourable court “This petition filed under Article 184(3) of the Constitution of the Islamic Republic of Pakistan, 1973 (“Constitution”), in substance essence seeks a declaration by this Court that respondent No,1, Mr. Imran Khan Niazi (“the Respondent”), is not qualified to be and is disqualified from being a member of the National Assembly”. The petitioner (Hanif Abbasi) through his learned counsel submitted these questions for consideration by the Court. i. Whether Imran Khan has made false declarations statements while issuing the certificates for the years 2010 to 2013 under section 13(2)(a) of the Political Parties Ordinance 2002 pledging therein that no funds from any source prohibited under the law were received by the Party? ii.

Whether Imran Khan has failed to disclose assets and concealed an offshore company while submitting his ‘statements of assets and liabilities’ therefore liable to be declared disqualified from being elected or remain member of the Parliament by this august court under Articles 62 and 63 of the Constitution? iii. Whether Imran Khan is guilty of offences of ‘corrupt practice’ and ‘tax evasion’ by declaring that the Banigala property is a gift from his former wife in his ‘statements of assets and liabilities’ whereas, admittedly, she was only a benamidar of the said property? iv. Whether mis-declarations, misstatements and contradictory pleases with regards to Banigala property make Imran Khan disqualified under Article 62 (1) (f) of the Constitution? v. Whether Imran Khan misused the tax amnesty scheme and played a fraud on public exchequer? The main argument taken by Mr. Naeem Bukhari, the learned Advocate Supreme Court on behalf of the respondent, Mr. Imran Khan was that since he has filed his tax returns since 1981 to date and is a tax filer. And then using the said year tax returns proceeded to convince the honourable Judges, that the petition should be dismissed and did succeed in it. So, in conclusion, we can say that a tax non-filer is a person, who if called on by any court/tribune of the country will not be able to prove that he/she is “honest and ameen”.


Anthony Williams is CEO of Tax Dosti and author of the book “What is Reality?”.