Only 600,000 of 3.3 Million Top Pakistani Earners File Taxes; FBR Report

The Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial has revealed that Pakistan’s top 5% income earners owe an alarming Rs. 1.6 trillion in unpaid taxes. Speaking at a press conference on Thursday alongside Finance Minister Muhammad Aurangzeb, Langrial highlighted that of the 3.3 million individuals in this income bracket, only 600,000 are registered tax filers.

The chairman pointed out that this affluent group accounts for a substantial portion of Pakistan’s tax gap, which has expanded to Rs. 7.1 trillion in the current fiscal year, compared to Rs. 6.2 trillion the previous year. He suggested potential cuts in the General Sales Tax (GST) rate to 10–12% down the line, aligning with the government’s wider economic reforms focused on improving revenue collection and refining the tax framework.

The Finance Minister, Aurangzeb, provided an overview of the government’s current reform initiatives, emphasizing efforts to enhance tax compliance and elevate the tax-to-GDP ratio to a minimum of 13% to secure fiscal stability. He reported on the advancements made in the digitization of FBR’s systems, highlighting that the implementation phase is currently in progress.

Minister of State for Finance Ali Pervaiz Malik highlighted positive developments in tax return submissions, increasing from 3 million the previous year to 5 million by October 2024. He revealed the identities of 190,000 individuals who have not filed their taxes, amounting to a collective debt of Rs. 50–60 billion.

These findings highlight the urgent necessity for robust tax enforcement strategies and comprehensive reforms to close the fiscal divide and promote economic stability.