Blocking mobile SIMs: explore alternative strategies to enhance tax collection, GSMA urges FBR

GSM Association (GSMA), an international organisation that represents the interests of mobile network operators worldwide, has expressed concern over the Income Tax General Order (ITGO) issued by the Federal Board of Revenue (FBR) on April 30, 2024 over blocking mobile sims of non-filers.

In a letter addressed to Shaza Fatima Khawaja, the Minister of IT, dated May 09, 2024 – a copy of which is available with Business Recorder – the association urged the FBR to explore “alternative strategies for enhancing tax collection” while ensuring that access to mobile services remains uninterrupted for all citizens.

Earlier, the FBR issued a list of 506,671 non-filers of income tax returns whose mobile phone SIMs would be blocked immediately by the Pakistan Telecommunication Authority (PTA) and all telecom operators.

According to the FBR, the ITGO was issued to disable the mobile phone SIMs in respect of persons who are not appearing on active taxpayer list but are liable to file the income tax return for tax year 2023 under the provisions of the Income Tax Ordinance, 2001.

Under the order, the mobile SIMs in respect of the mentioned individuals would remain blocked until restored by the FBR or the Commissioner Inland Revenue having jurisdiction over the person.

Blocking SIMs of non-filers: FBR decides to summon telcos’ operators

Following the development, cellular mobile operators (CMOs) in their letter to the Ministry of IT, released days ago, also raised their concerns with the Ministry of IT that the decision of FBR to block SIMs of non-filers was in undue haste and it will adversely impact telecom customers.

The GSMA, in its letter on Thursday which was also sent to the finance ministry, expressed concern that this ITGO will affect citizens and businesses, potentially hindering Pakistan’s progress in digital transformation and placing it behind regional peers on global benchmarks.

“Measures like this ITGO, may have unintended consequences, particularly for vulnerable segments of the population and is also not in line with the vision of Digital Pakistan especially more so for the digitization of FBR,” read the letter.

The GSMA said that it acknowledges response of the Pakistan Telecommunication Authority (PTA), emphasising the potential negative consequences of implementing this ITGO.

“Key concerns include its impact on citizen rights, livelihoods and access to essential services and information in addition to prevailing social norms, particularly regarding the gender bias in SIM card registration, where only 27% are registered against female Computerized National Identity Cards (CNICs).

“The execution of ITGO may also restrict connectivity for potential subscribers and users of mobile devices, especially children and female family members, affecting individual development and wellbeing,” GSMA highlighted in its letter.

The global mobile network body also pointed out concerns regarding reduced foreign investment confidence and the fairness of digital transformation efforts.

“Additionally, SIM blocking could disrupt banking, e-commerce, remittances, financial support, and e-health services conducted via mobile connectivity.

“In light of the correspondence from Mobile Network Operators (MNOs), the GSMA also acknowledges the existence of certain procedural concerns that warrant the attention of the government,” it noted.

The GSMA said that blocking mobile SIMs could potentially disrupt vital services and exacerbate the challenges faced by those who rely on mobile connectivity for their daily needs.

“Moreover, it may disproportionately affect marginalized communities who may already face barriers to tax compliance,” read the letter.

Therefore, instead of taking “punitive measures”, the GSMA urged the federal tax-collecting body to explore alternative strategies for enhancing tax collection while ensuring that access to mobile services remains uninterrupted for all citizens.

“The GSMA believes that adopting a balanced approach to tax compliance, one that promotes voluntary participation and fosters economic inclusivity will yield better outcomes for both the government and the citizens of Pakistan.