In a significant revelation, the Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial disclosed that Pakistan’s top 5% of earners have an outstanding tax liability of Rs1.6 trillion. Speaking at a press conference alongside Finance Minister Senator Muhammad Aurangzeb and Minister of State for Finance Ali Pervaiz Malik, Langrial highlighted the government’s focus on addressing this critical tax gap.
The FBR chief explained that the tax gap for the current fiscal year is estimated at Rs7.1 trillion, up from Rs6.2 trillion last year. He revealed that approximately 3.3 million individuals fall under the top 5% earning category, but only 0.6 million of them file income tax returns, leaving 2.7 million as non-filers or under-filers.
“Even when combining all categories below the top 5%, their total unpaid tax liability is not over Rs 140 billion,” Langrial emphasised.
Speaking at a press conference in Islamabad on Thursday, the FBR chief said that the income tax gap stood at Rs2.4 trillion.
Underscoring the reforms in the tax sector, Langrial revealed that the tax authority issued notices to 19,000 people, out of which 38,000 submitted their tax returns amounting to Rs370.7 million.
Finance Minister Aurangzeb stressed that tax reforms are a pivotal part of the government’s structural reform agenda. He said the recently introduced Tax Amendment Bill aims to enhance compliance and increase the tax-to-GDP ratio to 13% for sustainable fiscal management.
Aurangzeb also highlighted ongoing efforts to digitise the FBR’s systems, which have moved from the design phase to execution within a few months. “We aim not only to increase revenue but also to improve the ease of doing business, making it a win-win for the country,” he stated.
Minister of State for Finance Ali Pervaiz Malik added that 5 million individuals had filed tax returns by October 2024, compared to 3 million last year. He noted the government’s analysis of consumption data had identified 190,000 potential taxpayers, estimating their liability at Rs50-60 billion.
In response to questions, Langrial mentioned plans to reduce GST rates to 10-12% in the coming years, while Aurangzeb acknowledged the government is currently behind its revenue target but remains committed to achieving it.
Separately, Information Minister Attaullah Tarar addressed concerns from international agencies regarding recent military court convictions of civilians, assuring compliance with international obligations under the ICCPR. The European Union (EU) had earlier expressed concerns about the convictions, calling them inconsistent with Pakistan’s commitments.
