Tax base widens to record 10m.

ISLAMABAD -- The registered taxpayers in Pakistan reached the record at nearly 10 million but only 4.4 million of them filed annual tax returns and one-fourth actually paid any taxes in the last fiscal year, revealed a World Bank report.

The Implementation Status and Results report on the $400 million Pakistan Raises Revenue project once again exposes the weak tax enforcement system that is often offset by putting more tax burden on the already burdened individuals and companies.

'In June 2023, the total number of registered income taxpayers was 9.865 million and the active income taxpayers, referred to as compliant taxpayers, were 4.434 million,' said the report compiled last month.

This means there were 5.43 million other people and companies that got registered with the Federal Board of Revenue (FBR) but they did not file annual tax statements, showing that the FBR was not even able to catch the 55% registered taxpayers.

The report stated that out of those who submitted their returns, only 2.32 million paid any tax. The ratio of people and companies paying taxes was a mere 24% compared to the total registered taxpayers.

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In fiscal year 2022, about 8 million people were registered with the FBR and just 3 million filed returns till June 2022. The FBR extended the date for filing annual income tax returns till October 31 after less than 2 million submitted annual returns till the statutory deadline of September 30, 2023. This reflects very poor enforcement as only 18% of the now 10.5 million registered taxpayers had filed returns till the deadline.

Under the law, every person earning income above a certain threshold or having assets in his or her name is required to submit annual income and wealth statements.

The results of the four-year World Bank-funded programme once again underscore that Pakistan needs a strong political will, efficient taxmen and implementation of existing laws to get due taxes from people and companies.

An effort is being made by the interim government to promulgate a presidential ordinance for enhancing the tax base, an exercise that may prove futile, as the problem lies in enforcement, not data sharing.

Tax authorities will also miss some key targets under the $400 million project and will not be able to increase revenues to 17% of the size of economy.

The Washington-based lender has kept the poor rating of 'moderately satisfactory' for the project in its latest...