The tax base has expanded to an unprecedented 10 million

Web DeskOctober 16, 2023
The tax base has expanded to an unprecedented 10 million

In Islamabad, a recent report by the World Bank has revealed that although the number of registered taxpayers in Pakistan has reached nearly 10 million, only 4.4 million of them filed annual tax returns in the last fiscal year, and just one-fourth of them actually paid taxes.

This highlights the weak tax enforcement system in the country, which often places a heavier tax burden on individuals and companies. The report also mentioned the poor tax-to-GDP ratio, which was 9% as of June 2023, falling from 13% in June 2018. The tax collection target for this year is Rs9.41 trillion, equivalent to 9% of GDP. The report suggests that Pakistan needs a strong political will, efficient tax administration, and better enforcement of existing tax laws to increase tax collection.

Also Read: FBR Uncovers Multi-Billion Rupee Sales Tax Fraud in Multiple Sectors

The report also mentioned the World Bank’s $400 million Pakistan Raises Revenue project, which aimed to increase the country’s tax-to-GDP ratio to 17% by June 2024. However, the project is facing implementation delays, and the tax authorities are unlikely to achieve this target. The report gave a “moderately satisfactory” rating for the project’s implementation.

The report further noted that data sharing for tax broadening had improved, with 84 entities, including government departments, electricity distribution companies, and commercial banks, sharing data with the Federal Board of Revenue (FBR). However, the FBR has not made significant progress in monitoring and reporting tax arrears, and other project goals related to technical training, ICT equipment replacement, and withholding tax abolition have not been fully achieved.

Overall, the report emphasized the need for stronger tax enforcement and effective implementation of tax laws to improve Pakistan’s tax collection and revenue generation.

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