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It is concerning for top officials in the Federal Board of Revenue (FBR) that the top 5% of earners in Pakistan have evaded taxes amounting to Rs1.6 trillion.
Addressing a gathering, FBR Chairman Rashid Langrial highlighted that the government’s tax gap for the current fiscal year is projected at Rs 7.1 trillion, up from Rs 6.2 trillion last year.
Langrial revealed that approximately 3.3 million individuals fall under the top 5% income bracket. Shockingly, only 0.6 million of these individuals file their tax returns, leaving 2.7 million non-compliant. The government’s primary focus is on this top 5% to address the significant revenue gap.
Federal Finance Minister Muhammad Aurangzeb, speaking at a press conference in Islamabad, announced the initiation of structural reforms aimed at ensuring tax payments align with income and consumption levels. He emphasized that the government is implementing measures to control inflation while moving towards digitization to enhance transparency and reduce human intervention.
Aurangzeb stressed the importance of digitization in modernizing revenue collection and achieving tax targets. He explained that the tax bill introduced in Parliament is designed to combat non-declaration and under-declaration of income, integrate informal sectors into the formal economy, and ensure that taxpayers are treated fairly.
Highlighting the government’s efforts to reduce corruption, the Finance Minister said an end-to-end digitization process is underway to minimize human involvement, directly addressing corruption concerns. “Less human intervention in the system means fewer corruption complaints,” he noted.
Aurangzeb further shared that since the government assumed office in March, work on designing this system commenced immediately and is now nearing completion. The reforms aim to shield honest taxpayers from additional burdens while tackling tax leaks and gaps to ease pressure on the general public.
FBR Chairman Langrial, while elaborating on institutional improvements, said the organization’s capacity is being enhanced with the adoption of modern tools. He disclosed that 190,000 individuals had been issued tax notices, leading 38,000 to file their returns. The top five sectors of tax collection remain the focal point of the government’s interventions.
