Top 5% Wealthiest Pakistanis Owe Rs. 1.6 Trillion in Unpaid Taxes: FBR Chairman

Chairman Federal Board of Revenue (FBR) Rashid Mahmood Langrial on Thursday revealed that Pakistan’s top 5 percent earners have evaded Rs. 1.6 trillion in taxes. Speaking at a press conference alongside Finance Minister Muhammad Aurangzeb, Langrial revealed that 3.3 million individuals fall under the top 5 percent category but only 600,000 are filers. He said this group alone accounts for a substantial portion of the government’s tax gap, which has risen to Rs. 7.1 trillion for the current fiscal year from Rs. 6.2 trillion last year. The chairman said the average annual income of 670,000 individuals is Rs. 13.2 million, while 3.3 million others report an average annual income of Rs. 4.8 million. Despite such significant earnings, tax evasion remains a big problem. Langrial also hinted at potential reductions in the GST rate to 10-12 percent in the coming years in accordance with the government’s economic reforms to enhance revenue and tax systems. Finance Minister Aurangzeb said the government’s reform agenda aims to improve tax compliance and increase the tax-to-GDP ratio to at least 13 percent for fiscal sustainability. He acknowledged there was some progress in digitizing FBR’s systems and the execution of the digitization phase was now underway. Minister of State for Finance Ali Pervaiz Malik pointed out that tax return filings have grown from 3 million last year to 5 million by October 2024. He also claimed that 190,000 non-filers had been identified who owed Rs. 50-60 billion in taxes.