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Pakistan’s tax gap has surged to over Rs. 7 trillion, according to the chairman of the Federal Bureau of Revenue (FBR), as reported by national media on Thursday.
During a press conference in Islamabad today, FBR Chairman Rashid Mahmood Langrial disclosed that the country is grappling with a significant tax gap of Rs. 7.1 trillion, despite the government led by Prime Minister Shehbaz Sharif making vigorous efforts to broaden the tax base and enhance revenue collection. He noted that the income tax gap alone amounts to Rs. 2.4 trillion.
Langrial emphasized the ongoing reforms in the tax sector, revealing that the tax authority had issued notices to 19,000 individuals, resulting in 38,000 tax returns being filed, which totaled Rs. 370.7 million.
“Our primary focus is on the top five percent,” he stated, warning that actions would be taken against those who fail to submit their tax returns.
Accompanied by Federal Finance Minister Muhammad Aurangzeb, Minister of State for Finance and Revenue Ali Pervaiz Malik, and Information Minister Attaullah Tarar, the FBR chairman highlighted the reforms underway, including the digitization of the invoicing process and digital monitoring of the sugar industry.
Additionally, Finance Minister Aurangzeb mentioned that the government aims to raise the country’s tax-to-GDP ratio from the current 9-10% to 13.5% through the recently introduced Tax Laws (Amendment) Bill, 2024.
“We need to achieve this tax target within three years,” he remarked, stressing the importance of reducing tax evasion and formalizing the informal sector. The federal minister also noted that there is an existing potential for an additional Rs. 71 billion in tax revenue.
