Islamabad December 26 2024: Pakistan outlined the measures taken and progress achieved since it began implementing a comprehensive economic reform agenda aimed at widening the tax base through digitization of the Federal Board of Revenue (FBR), disclosing the identification of approximately 190,000 evading taxes amounting to PKR 60 billion.
FBR chairman said that currently FBR has evolved its data analytic systems and added that the total tax gap was PKR 7.1 trillion. “We are mainly focusing on the top five percent in terms of revenue collection and out of the top five percent people, which are 3.3 million, 600,000 people have so far filed their returns.
He said out of 190,000, only 38,000 people have filed returns and paid PKR 370 million tax, while notices were issued to 169,000 wealthy non-filers.
“… When consumers’ data was compiled/refined through an algorithm method, it disclosed that 190,000 persons leading a high-standard lifestyle [with luxury vehicles and properties] are non-filers. Following this ground-truthing of the top 5,000-6,000 was performed through field staff that confirmed around PKR 7 billion in taxes from them. If calculated today on the basis of 190,000 persons who should be direct taxpayers, there is an PKR 50-60 billion taxation pocket, easily,” states Finance Minister.
This revelation was made during a joint news conference by Minister for Finance and Revenue Senator Muhammad Aurangzeb, Minister for Information and Broadcasting Attaullah Tarar, Minister of State for Finance and Revenue Ali Pervaiz Malik, and Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial.
Finance Minister Aurangzeb said that the incumbent government soon after assuming the powers introduced structural reforms in the national economy to put it on the path of sustainable development and growth, adding that the taxation reforms remained on the top of the reforms agenda.
The government, he said, was intended to enhance the tax-to-GDP ratio up to 13 percent, which was currently estimated at 9 to 10 percent of the GDP, adding the increase in revenue collection would not only strengthen the fiscal sides but also project the country’s image as responsible image as a responsible state in the comity of nations.
He said the government had introduced a bill in the National Assembly to ensure full tax compliance, besides overcoming the issues related to non-declaration and under-declaration for enhancing the revenue collection in the country.
Besides, Aurangzeb said the government was working on the technology transformation in the FBR and it introduced end to end digitization for ensuring transparency, minimizing the human interventions to control harassment and eliminate the elements of corruption to increase revenue collection.
He said the work on the design of the digitization of FBR was started in March 2024 under the dynamic leadership of Prime Minister Muhammad Shehbaz Sharif, which was approved in September and now passing through its implementation stage, focusing on key economic sectors integration to plug leakages.
Addressing the press conference Minister of State for Finance Ali Pervaiz Malik said the increase in tax resources, keeping them judicious and extending to all sectors of the economy were the basic element of the national tax strategy.
Besides, he said execution of modern tools and digitization of FBR and conversion from indirect taxation to direct taxation as well as use of modern algorithms was the other objectives of the strategy to bring the people into a normal tax regime for ensuring the tax compliance culture in the country.
Accordingly, he said the government had also formed a task force for the capacity building of the institutions, which was comprised of experts from the IT sector, academia, data analysis and businesses, adding that it helped to establishing different dash-boards in the FBR to strengthen efforts of the tax compliance.
Using the data analysis, he said, the government had identified about 190,000 potential tax payers, which must be in tax net, he said adding that the data was further authenticated by the field formations, following this ground-truthing of the top 5,000-6,000 was performed through field staff that confirmed around Rs7 billion in taxes from them.
“If calculated today on the basis of 190,000 persons who should be direct taxpayers, there is an PKR 50-60 billion taxation pocket, easily,” he elaborated.
He said the government had also introduced measures to protect common man in the country from the inflationary shocks through overcoming its deficits and economic management. “These measures are now bearing results and the inflation rate has come down to a single digit.”
FBR chairman Rashid Mahmood Langrial said the FBR was committed for digitization and automation in tax system and a lot of work had been completed for digitization and automation and execution was also priority of the institution.
He said that FBR coordinated well with all relevant institutions, and currently, all main institutions were working together with FBR to achieve the annual revenue target in the current Fiscal Year (2024-25).
The chairman said that currently FBR has evolved its data analytic systems and added that the total tax gap was PKR 7.1 trillion. “We are mainly focusing on the top five percent in terms of revenue collection and out of the top five percent people, which are 3.3 million, 600,000 people have so far filed their returns.
He said out of 190,000, only 38,000 people have filed returns and paid PKR 370 million tax, while notices were issued to 169,000 wealthy non-filers.
