ISLAMABAD: He may be the most famous prankster in Pakistan, but the tax authorities are in deadly earnest when they say they believe he owes them Rs13 million. The prankster in question is YouTube star Nadir Ali who runs a channel called P for Pakao, which features short videos of Nadir and his team pulling pranks on unsuspecting people around the country.

His videos, rarely more than a few minutes long, get more than a million hits each and the channel has more than three million subscribers. The channel has racked up more than 820 million views in total, making it one of the largest online channels in Pakistan.

The Federal Board of Revenue (FBR) has been investigating him for concealment of income for a while now. It is not known when the investigation was launched, but those connected with it in the Intelligence and Investigation Department say it has now been concluded and the matter referred to the Chief Commissioner Inland Revenue Tax Office (RTO)-III in Karachi for “implementation and recovery of the tax evaded”.

During the course of investigation, tax officials say, numerous notices have been served on him. “He has not replied to any of them,” they tell Dawn. He now has the option to appeal the order before the Commissioner Appeals in the RTO office in Karachi.

The case is the first in what FBR officials say a series of actions against individuals deriving large income from hosting online content that have not been declared for tax purposes. In the scene of Pakistani online stars, Nadir’s is a near iconic story, rising from obscurity as a small time comedian to an internet star in four years. He started his YouTube channel in May 2016 and now has a presence on Facebook and Instagram as well.

As a resident person, Nadir registered with the income tax department on Oct 13, 2017 and filed returns for the tax years 2016-2019. In the first two years (2016 and 2017), he declared nil income, while in the following two years — 2018 and 2019 — income was declared at Rs809,762 and Rs14.44m, respectively.

The FBR investigation reveals that Nadir’s tax returns do not contain a full record of his income, leading them to believe he has concealed his income.

As per details, Nadir received an income of Rs2.186m in tax year 2017, Rs28.335m in 2018 and Rs46.762m in tax year 2019. The details of payment have been verified by the FBR from YouTube.

Moreover, the taxpayer has received more than Rs10m of foreign exchange during the year on which exemption was claimed without furnishing proof to the tax department. At the same time, the taxpayer maintained a bank account, which he did not declare in the wealth statement.

The case marks a first milestone in the FBR’s ongoing efforts to expand its reach into the realm of online incomes. As growing numbers of online entrepreneurs are expanding their business and viewership to online audiences through content sharing platforms like YouTube, Instagram, Facebook and Twitter, the tax authorities have struggled to build their capacity to identify the resultant income streams.

In the days to come, many other stars and celebrities who built an income stream for themselves from an online presence could also be in for a surprise call from the tax authorities. “People need to realise that incomes generated from online content is taxable and records need to be maintained for five years and declared in their annual return filings” a senior official of the FBR said.

Speaking to Dawn through his lawyer, Nadir denied having not responded to the FBR. “We received their notice and responded through in person appearance and then applied for an extension in the time to file a response and our application was approved. We are working now to resolve this through all proper ­channels,” he said.

Published in Dawn, April 8th, 2020