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The Federal Board of Revenue (FBR) in Pakistan has taken measures to increase government revenue and encourage tax compliance by revising the tax rates on motor vehicles for non-filers. Non-filers, individuals not on the Active Taxpayers List (ATL), will now face a substantial increase in the tax rates.
According to a circular issued on Wednesday, non-filers will be subject to a fixed tax rate of 18%, 24%, and 30% based on the value of their motor vehicles, depending on the engine capacity. The revised rates represent a significant 200% increase compared to the previous rates.
To further incentivize tax compliance, the FBR has replaced the fixed amount of tax on motor vehicles for ATL individuals with tax rates of 6%, 8%, and 10% based on the value of the vehicle and its engine capacity.
For motor vehicles with a value of Rs5,000,000 or more, where the engine capacity is not applicable, the tax rate collectible will be 3% of the import value (including customs duty, sales tax, and federal excise duty) for imported vehicles or invoice value for locally manufactured or assembled vehicles.
In addition to the tax on motor vehicles, the circular also introduces withholding tax rates on bank withdrawals and credit/debit card transactions. Non-ATL filers will be charged Rs303 for a bank withdrawal of Rs50,500 and Rs450 for withdrawals between Rs55,000 and Rs75,000.
To curb unnecessary outflow of foreign exchange reserves through credit/debit card transactions, the withholding tax rates have been increased from 1% to 5% for ATL individuals and from 2% to 10% for non-ATL individuals.
Notably, government agencies and foreign diplomats will be exempted from these taxes.
The FBR’s decision to increase tax rates for non-filers aims to boost government revenue and promote tax compliance among citizens, encouraging them to become active taxpayers and contribute to the country’s economic growth.
