Top 5% of Earners in Pakistan Owe Rs1.6 Trillion in Unpaid Taxes

In a shocking revelation, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial disclosed that the top 5% of earners in Pakistan have evaded taxes amounting to Rs1.6 trillion. He shared these figures during a press conference on Thursday, alongside Finance Minister Senator Muhammad Aurangzeb and Minister of State for Finance Ali Pervaiz Malik.

Langrial highlighted that the government’s tax gap for the current fiscal year has risen to Rs7.1 trillion, compared to Rs6.2 trillion last year. He said the government’s primary focus is on addressing the tax evasion by the top 5% of earners.

According to Langrial, 3.3 million individuals fall within this category, but only 0.6 million file tax returns, leaving 2.7 million as non-filers. Their unpaid tax liability is estimated at Rs1.6 trillion. In contrast, the total unpaid liability for categories below the top 5% is under Rs140 billion.

Finance Minister Aurangzeb emphasized the importance of tax reforms in the government’s structural reform agenda. He noted that the recently introduced tax amendment bill aims to enhance compliance within the tax system. He also spoke about the government’s digitization efforts, which have moved into the execution phase under the guidance of Prime Minister Shehbaz Sharif.

Aurangzeb said the government is working to modernize FBR’s internal systems, improve the economy, and ease business operations to boost revenue and achieve a tax-to-GDP ratio of 13%, ensuring fiscal sustainability. He admitted that tax revenue targets remain unmet but assured efforts are underway to address the shortfall, including discussions with the IMF during their upcoming visit.

Minister of State Ali Pervaiz Malik revealed that the number of tax filers increased to 5 million by October 2024, compared to 3 million last year. An analysis of consumption data identified 190,000 potential taxpayers who had not filed returns, with an estimated liability of Rs50-60 billion.

Langrial also mentioned that the GST rate could be reduced to 10-12% in the coming years.

Separately, Information Minister Attaullah Tarar dismissed concerns raised by international agencies regarding the conviction of 25 civilians by a military court over the May 9 riots. He assured that Pakistan remains compliant with international obligations.

Earlier, the European Union criticized the convictions, stating they conflict with Pakistan’s commitments under the International Covenant on Civil and Political Rights (ICCPR).