Islamabad, Dec 26: Chairman of the Federal Board of Revenue (FBR), Rashid Mahmood Langrial, disclosed on Thursday that Pakistan’s top 5 percent earners have evaded an astounding Rs. 1.6 trillion in taxes. Speaking at a press conference alongside Finance Minister Muhammad Aurangzeb, Langrial explained that this group consists of 3.3 million individuals, with only 600,000 of them filing taxes.
This tax evasion has contributed significantly to Pakistan’s widening tax gap, which has increased to Rs. 7.1 trillion for the current fiscal year, up from Rs. 6.2 trillion last year. The chairman highlighted that the average annual income of 670,000 individuals in the top 5 percent is Rs. 13.2 million, while the other 3.3 million report an average income of Rs. 4.8 million. Despite these substantial earnings, tax evasion remains a significant challenge.
Langrial also suggested that the government might reduce the General Sales Tax (GST) rate to 10-12 percent in the coming years, as part of broader economic reforms aimed at enhancing the tax system and boosting revenue collection.
Finance Minister Aurangzeb emphasized the government’s reform agenda, which seeks to improve tax compliance and raise the tax-to-GDP ratio to at least 13 percent for fiscal sustainability. He acknowledged progress in digitizing the FBR’s systems, with the execution phase of digitization now in progress.
Minister of State for Finance, Ali Pervaiz Malik, added that tax return filings had increased from 3 million last year to 5 million by October 2024. He also noted that 190,000 non-filers had been identified, who collectively owed Rs. 50-60 billion in taxes.
