Islamabad Web Desk: The Chairman of the Federal Board of Revenue (FBR), Rashid Mahmood Langrial, has revealed that the top 5% of Pakistan’s highest earners evade taxes amounting to 1.6 trillion rupees. He announced that action would be taken against these individuals.
During a press conference, Chairman Langrial disclosed that the tax gap for the current fiscal year is projected to reach 7.1 trillion rupees, up from 6.2 trillion rupees last year. He emphasized that the government’s tax collection efforts are focused on the top 5% of earners.
He further explained that approximately 3.3 million individuals fall into this top-earning category, but only 600,000 file tax returns. The remaining 2.7 million individuals neither file tax returns nor fulfill their tax obligations.
The chairman stated that many of these individuals either file returns below their income category or do not file them at all. Collectively, their tax liability exceeds 1.6 trillion rupees. Even if the government reduces the scope of this category, the total recoverable tax would not be less than 140 billion rupees.
To meet the conditions set by the International Monetary Fund (IMF), Finance Minister Muhammad Aurangzeb announced a digitization strategy for the FBR, aimed at bringing wealthy individuals into the tax net. So far, the FBR has issued 186,000 tax notices to affluent individuals who possess substantial assets, income, and luxury vehicles but fail to pay the required taxes.
According to the FBR, 670,000 of the nation’s wealthiest individuals—representing the top 5% of earners—are likely evading taxes and avoiding inclusion in the tax net despite their significant expenditures. These individuals remain a key focus of FBR’s scrutiny.
When questioned about the possibility of presenting a mini-budget or convincing the IMF to lower its tax collection target, the finance minister refrained from providing a direct answer. Instead, he assured that the government would demonstrate its sincere efforts to the IMF and share all details transparently. He noted that certain assumptions have changed, citing a sharp decline in inflation as a key factor.
The finance minister highlighted that the National Finance Agreement between the federal and provincial governments has been reached, and its implementation will be carried out in collaboration with federal units. Punjab has already passed legislation on agricultural income tax (AIT), and other provinces are making progress on similar initiatives.
Minister Aurangzeb stated that the FBR achieved a 29% increase in revenue collection, although the current fiscal year’s target was set at an ambitious 40% growth.
Chairman Langrial elaborated that the FBR prioritized 190,000 non-filers based on six key factors, including those earning an annual bank profit of over 1.3 million rupees and owning three or more vehicles with a combined value exceeding 10 million rupees.
Additionally, the Senate Standing Committee on Finance approved amendments to tax laws. Under the new provisions, non-compliant taxpayers will be restricted from purchasing luxury cars, properties, and bungalows. They will also face restrictions on opening bank accounts and purchasing shares.
