Prime Minister Shehbaz Sharif has initiated a bold and comprehensive approach to enhance tax enforcement and compliance in Pakistan. In a significant policy shift, he has approved a series of stringent measures that include prohibiting all banking and financial transactions for individuals who have not filed their tax returns. This initiative aims to tackle the prevalent issue of tax evasion and to strengthen the country’s revenue base.
The Prime Minister has directed the Federal Board of Revenue (FBR) Chairman, Rashid Mahmood Langrial, to present summaries to the federal cabinet for the swift implementation of the FBR Indigenous Transformation Plan. This plan, developed over the past 40 days by a dedicated team of over 50 tax experts, addresses critical structural challenges that have hampered revenue growth.
Currently, a staggering 25% of currency in circulation in Pakistan highlights a significant gap compared to regional peers like Bangladesh and India, which stand at 14%. The transformation plan is designed to minimize this currency circulation, thereby promoting a more documented economy. Notably, the plan stipulates that non-filers will be restricted from acquiring assets such as cars and real estate and will face limitations on banking activities.
Furthermore, the initiative reveals alarming statistics about tax registration, with only 14% of manufacturers and a mere 8% of retailers registered for income tax. The proposed measures include stringent penalties for non-compliance, such as freezing bank accounts and imposing heavy fines.
In a positive move for accountability, tax officers will receive incentives based on their performance and integrity. This proactive strategy aims not only to improve tax collection but also to enhance service delivery, ultimately benefiting the broader social sector. The Prime Minister’s emphasis on consultation with prominent taxpayers underlines the government’s commitment to fostering a more transparent and efficient tax system in Pakistan.
