ISLAMABAD: The Pa­k­is­tan Telecommunication Authority has taken exception to a directive by the Federal Board of Revenue seeking to block SIM cards of over 500,000 non-filers, saying the move is counter-productive and can attract litigation.

The decision followed a meeting between the PTA and telecom companies, namely Zong, Ufone, Jazz, and Telenor which had expressed apprehensions about the FBR’s move.

In its response to the FBR, the telecom regulator said the tax watchdog’s req­uest on April 29, seeking to block SIMs of 506,671 individuals who fai­led to file their tax ret­urns for the tax year 2023, needed to be reviewed.

The PTA apprised the FBR that the Income Tax General Order (ITGO) in the manner referred to the telecom authority “needs review before its execution by the entities concerned”.

Section 114-B of Income Tax Ordinance 2001 empo­wers the FBR to issue ITGO to persons who were not appearing on the active taxpayers list and disable their sims as well as discontinue their electricity and gas connections. Acco­r­ding to the PTA, the consultation with stakeholders on the subject matter had been ongoing.

In an official response to the FBR’s Inland Revenue-Operations, the PTA said the matter needed review in a holistic manner in light of consultations with all stakeholders, including the IT and telecom ministry.

According to the PTA, Section 114-B which pertains to the blocking of SIM cards of non-filers has no legal binding on the telecom regulator as it is inconsistent with the “applicable legal framework” and does not fall within the jurisdiction of the PTA.

The response said that the execution of this order would have an adverse impact on prevailing social norms in many respects as in Pakistan, male members of the society “prefer to register SIMs against their CNICs instead of females and juvenile members of the family”. At present, only 27 per cent of the SIM cards are registered against the CNICs of women.

The PTA said blocking SIM cards would adversely impact e-commerce, such as online businesses, remittances, and e-health activities. The decision will also impact the confidence of foreign investment in the telecom sector, including the government’s targets of digital transformation.

“It has also been observed that before execution of the ITGO order, factual issues with regard to usage of SIMS against CNICs also need to be verified on the premise that any person may obtain eight SIMs that include three data and five Voice SIMs therefore, before implementing ITGO, procedural steps with regard to notices would require to be issued by FBR as provided in section 114-B of the Income Tax Ordinance, 2001”.

Finally, the telecom regulator has also forewarned the tax collecting body that the decision to block SIMs would not yield the desired results and the decision will land into litigation. “To avoid any litigious implication, it is also suggested that instead of invoking the penal action in terms of blocking of SIMs at first instance, other alternative modes for ensuring better compliance for filing of income tax returns may be sorted out by carrying out awareness campaign(s),” said the PTA.

The telecom regulator suggested the FBR could use SMS service to create awareness among non-filers in this regard.

Published in Dawn, May 5th, 2024