FBR sent Tax Notices to Pakistani Freelancers

The Federal Board of Revenue (FBR) of Pakistan announced to send bulk notices to the Freelance Community of Pakistan. FBR said that they have uncovered a “Mega Scam” of more than 60 Billion PKR. The Government of Pakistan takes taxes on everything in Pakistan. FBR exposed that the citizens, to be more specific, Freelancers of Pakistan along with the “Payoneer”, an American Company of Financial Services, did a mega scam by not paying taxes, they exposed that more than 60 Billion are transferred to Pakistani Freelancers’ accounts without paying taxes. 70,000 Pakistani freelancers have not paid taxes on the amount received by working remotely as a freelancer and it happened without telling to tax authorities. It is happening for the past 2.5 years (2019, 2020, and the first half of 2021).

Whoever works here first has to get registered with the Tax Authority of Pakistan.  Freelancers are a major part of our community and freelancing is the only source of income for many individuals. While talking of growth of the freelance community and earning from freelancing platforms, let me tell you that Pakistan is in 4th number out of the top 10 freelancing countries. Many people rely on freelancing, they prefer to do freelancing along with their job which is I think is a very good practice for income.

FBR officials exposed this scam while talking to “The News” on Tuesday, they said that we have discovered that a total of 75,615 citizens received funds and out of this 5,012 citizens were not registered with the tax authorities of Pakistan. That’s why, we started an investigation about the total amount received by Pakistani freelancers and we came to know that the amount of 60.308 Billion PKR was expended within 2.5 years to 75,615 freelancers, and out of 75,615 freelancers, more than 45K freelancers have not paid any tax on the amount they earned. So, after this investigation, the Federal Board of Revenue decided to send bulk notices to all the freelancers who hadn’t paid taxes.

Payoneer has its Physical branches only in foreign countries; there is not any branch of Payoneer in Pakistan. The foreign buyers or clients make payments using their Payoneer account. They send money directly to the account of individual Pakistani Freelancer in the United States (US) and after that, the Pakistani freelancers withdraws that money using their Payoneer account supported by Mobilink Micro Finance Bank Limited (MMBL) using their different Payment methods (Jazz Wallet or bank accounts linked with local banks of Pakistan) without paying tax to the tax authority. The FBR said that 27 local banks are included in this scam along with the Payoneer.

Zulfiqar Ahmad, Offshore Taxation Commissioner, said that it’s a great achievement for FBR in terms of revenue. He said that all the investigation was done after the order of the director-general of International Taxes in Islamabad. It was declared that under the Income Tax Ordinance 2001 and the Federal Excise Act 2005, tax proceedings were initiated against Payoneer because of its income.

Posted: 10 Mar 2021

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