Despite 5.9 million tax returns filed in the current fiscal year, a significant 43.3% of filers declared zero taxable income, underscoring Pakistan’s narrow tax base, according to a news report.
Official data reveals that only 3,651 individuals reported income exceeding Rs100 million, while just 12 declared assets worth over Rs10 billion. These figures point to either widespread tax evasion or a genuine lack of high-income earners in the country.
The total number of tax filers in 2024-25 includes 5.8 million individuals, 104,269 Associations of Persons (AOPs), and 87,900 companies. This is a decline from previous years, with 6.8 million filers recorded in 2023 and 6.3 million in 2022—well below the estimated 15 million potential filers.
A major gap exists in corporate filings, as Pakistan has over 300,000 industrial electricity connections, yet only 87,000 companies have submitted tax returns.
A breakdown of tax declarations shows that a vast majority of filers report low incomes. Around 272,112 individuals disclosed taxable income up to Rs400,000, while 187,741 filers reported income between Rs400,000 and Rs500,000.
As the income brackets rise, the number of filers decreases, with only 1.3 million declaring income between Rs1 million and Rs5 million. At the higher end, only 97,326 filers reported earnings between Rs5 million and Rs10 million, while 49,359 fell in the Rs10 million to Rs50 million range.
The numbers continue to shrink at the top, with just 4,370 individuals reporting income between Rs50 million and Rs100 million, and a mere 3,651 disclosing earnings above Rs100 million.
Despite total declared earnings surpassing Rs10 trillion, the net tax collected from all filers stood at Rs2.9 trillion. Given these disparities, the Federal Board of Revenue (FBR) is considering scrapping the non-filer category and introducing new classifications of ‘eligible’ and ‘ineligible’ taxpayers.
These categories would be used to determine access to high-value transactions, such as purchasing property worth Rs10 million or buying new cars. The proposed changes reflect an effort to enhance documentation and broaden the tax net in a country where significant portions of economic activity remain outside the formal tax system.
