Six per-cent of Pakistani’s paid 79pc of direct taxes during tax year 2016

FBR’s tax to gross domestic product ratio stood at 10.7pc during FY 2015-16, which worsened further to 10.6pc in FY 2016-17


ISLAMABAD: Data from Tax Directory 2016 revealed a meagre 6pc (65,000 Pakistani’s) of those who filed their income tax returns in tax year 2016 paid 79pc of direct taxes.

Only 2,455 Pakistani’s are said to have paid more than Rs10m in income tax during 2016, according to Tax Directory 2016, reported Express Tribune.

28pc of direct taxes in 2016 were paid by 2,455 individuals to the tune of Rs59.4b. These form only 0.22pc of individuals said to have filed income tax returns for the year 2016.

Average per person contribution among 2,455 individuals stood at Rs24.2m. Federal Board of Revenue (FBR) received Rs210b in income tax during financial year 2015-16.

Rs166b (79pc) in income taxes were said to have been paid in FY 2015-16 by 65,000 Pakistani’s. The country’s abysmal tax base has been a thorny issue for several decades and successive governments ineptness has been exposed to improve this problem.

FBR’s tax to gross domestic product ratio stood at 10.7pc during FY 2015-16, which worsened further to 10.6pc in FY 2016-17. During FY 2015-16, 1.136m individuals filed their income tax returns and average per person contribution stood at Rs184,715.

Despite having complete data about bulk of high net worth individuals, FBR has failed in bringing them into the tax net. As per regulations, every citizen earning over Rs400,000 on a yearly basis has to file their income tax returns.

The tax watchdog is involved in desperate measures of charging punitive withholding tax from non-filers of income tax compared to those who file them, despite the tax base remaining small.

Individuals who paid income tax in range of Rs1m to 10m provided the maximum contribution to FBR. And these 33,290-people contributed over Rs87b or above 41pc of total direct taxes.

Around 28,532 individuals paid to the tune of Rs20b or equivalent one-tenth of total direct taxes. Income tax paid by these people ranged from Rs500,001 to Rs1m. Average contribution per person stood at Rs703,152.

Furthermore, tax directory revealed 136,467 individuals paid Rs31b in income tax, which constituted 14.4pc share of total tax contribution. Income tax of over Rs100,000 to Rs500,000 was paid by these people.

And around 224,000 people paid Rs11b or around 5.2pc of total direct taxes. These were largely salary class people whose contribution stood around Rs20,000 and Rs100,000.