In an important revelation, Chairman of the Federal Board of Revenue (FBR), Rashid Mahmood Langreal, revealed that the top 5% of income earners in Pakistan have outstanding tax liabilities amounting to Rs 1.6 trillion. Speaking at a press conference alongside Finance Minister Senator Muhammad Aurangzeb and Minister of State for Finance Ali Parvez Malik, Langreal 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 Rp7.1 trillion, compared to Rp6.2 trillion last year. It revealed that nearly 3.3 million individuals fall into the top 5% income bracket, but only 0.6 million of them file income tax returns, leaving 2.7 million unfilers or under-filers.
“Even when all groups below the top 5% are combined, their total unpaid tax liability is no more than Rs 140 billion,” Langreal stressed.
Speaking at a press conference in Islamabad on Thursday, the RBI chief said the income tax gap amounted to Rs 2.4 trillion.
Emphasizing the reforms in the tax sector, Langreal revealed that the IRS had issued notices to 19,000 people, of whom 38,000 had submitted their tax returns worth Rs 370.7 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 the ongoing efforts to digitize FBR systems, which have moved from the design stage to implementation within a few months. “We aim not only to increase revenues, but also to improve the ease of doing business, making it profitable for the country,” he added.
Minister of State for Financial Affairs Ali Parvez Malik added that 5 million individuals had submitted their tax returns by October 2024, compared to 3 million last year. He noted that the government’s analysis of consumption data has identified 190,000 potential taxpayers, and estimates their liabilities at between 50 and 60 billion rupees.
Responding to questions, Langrial mentioned plans to reduce GST rates to 10-12% in the coming years, while Aurangzeb acknowledged that the government is currently lagging behind the revenue target but remains committed to achieving it.
Separately, Information Minister Atallah Tarar addressed concerns of international agencies regarding recent military court rulings against civilians, stressing compliance with international obligations under the International Covenant on Civil and Political Rights. The European Union had previously expressed its concern about these condemnations, describing them as inconsistent with Pakistan’s obligations.