Focus is ‘top 5pc’, says FBR chairman as govt aims to curb tax evasion

Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial on Thursday said that the purpose of carrying out end-to-end digitisation of the tax process was to bring the top five per cent of the wealthy into the tax net.

His comments came a day after the government announced its plan to increase the tax-to-GDP ratio from the current 10 per cent to 13.5pc within the next three years, stressing that the proposed amendments to tax laws would improve tax collection and compliance in the country.

During a press conference today, the FBR chairman, along with the finance minister and minister of state for finance and revenue, said, “The top five per cent of people — who should be in the system — are 2.7 million plus 0.6.

“That means 3.3m people who fall in the top five pc, and whose average income is 4.8 billion, fall into the taxable category,” he stated, adding that the average income of the top one pc was higher than this.

“And our country is very poor — it’s not very rich — even if we do not tax anybody in the the 95pc, the maximum income level liability we lose is less than 140bn,” he elaborated.

“So we are trying to target those people who spend money — who have money to spend.”

He further added that the FBR was receiving support from institutions, such as Nadra, for data to target.

Digitalisation of FBR aimed at enhancing transparency: finance minister

Meanwhile, Finance Minister Muhammad Aurangzeb said that FBR’s digitalisation and ending human intervention was important to decrease corruption and harassment in the tax authority, state-owned Radio Pakistan reported.

“So that we can bring effective compliance in the tax regime and tax laws we talk about, and the taxes can be paid according to income and consumption levels,” he said.

Aurangzeb also said taxation reforms played a key role in fiscal stability, adding that the country’s current tax-to-GDP ratio was currently languishing between 9 to 10pc, and it had to be brought up to to the target of 13.5pc in the next three years.

Furthermore, he stated that FBR’s digitilsation was now in the “executive phase” after being approved under the current administration of Prime Minister Shehbaz Sharif.

“Firstly, the focus has been to modernise FBR’s external systems and bring it towards data analytics so we can tackle tax evasion,” he said. “So that honest tax payers are not burdened.”

Secondly, Aurangzeb also highlighted that they were also working on “better integration in terms of deeper tax value chain linkages and ultimately tax gaps” of key economic sectors such as sugar, cement and textile.

“We can cover them better through data analytics so that the common man does not have undue pressure,” he added.

Moreover, Minister of state for Finance and Revenue Ali Pervez Malik echoed the same sentiments.

He said the government was trying to “institutionalise” the system, underscoring the need for increasing revenue and tax sources so it did not burden the common man.