Businessmen paid only Rs1.4b in taxes last year

Tax evasion on the rise as only one out of every 10 businessmen file tax returns.

ISLAMABAD: Tax evasion is on the rise in Pakistan as only one out of every 10 businessmen filed their tax returns during the last financial year, revealed a top official of the Federal Board of Revenue (FBR).

FBR Member Abrar Ahmed said that during fiscal year 2010 a total of 533,584 non-salaried individuals (businessmen) filed their income tax returns. Out of that, only 64,250 taxpayers showed a profit and paid Rs1.4 billion in taxes. Owners of large corporate firms or those included in association of persons are not included in this number.

Of the remaining taxpayers, 72,436 declared that they have already paid more taxes than required and claimed Rs3 billion in refunds from the FBR.

Statistics such as these demonstrate the level of acceptance of tax culture in Pakistan. FBR Chairman Sohail Ahmed has also commented that “the law of the land does not allow him to arrest tax dodgers”.

Fauzia Wahab, the chairperson of the standing committee on finance and revenue, has also said that there is no taxpaying culture in Pakistan.

“No one is paying taxes and this data depicts the ground realities,” said Abrar Ahmed. Pakistan is struggling to increase its tax base. The general sales tax bill has been tabled in parliament but faces stiff resistance. The bill is aimed at generating more revenue by netting in the undocumented economy.

“The FBR should also provide income tax data for all military generals, judges, members of parliament, federal secretaries and chairpersons of government commissions so people know who pays what,” said Bushra Gohar of the Awami National Party, adding that “people want to pay tax but there is no confidence in the FBR in view of massive corruption and tax evasion.”

Statistics show that in Regional Tax Office (RTO) Abbottabad 7,964 taxpayers paid only Rs12 million in taxes. In Bahawalpur, 123 taxpayers deposited Rs15 million. The RTO in Faisalabad received 6,097 returns with a payment of Rs49 million in income tax. Faisalabad is the third largest city and is known as the Manchester of Pakistan.

The RTO in Gujranwala received 1,598 income tax returns totaling Rs11 million. The tax office in Hyderabad received 2,511 returns amounting to Rs29 million. Some 2,307 individuals paid Rs93 million in taxes in Islamabad. The RTO in Multan received 6,777 returns while tax paid was Rs45 million and the tax office in Peshawar received 2,012 returns with Rs36 million being paid in taxes. Quetta tax offices received 477 returns and got Rs12.9 million in taxes.

In the commercial hub of Karachi, 16,299 individuals filed their returns and deposited Rs668 million in taxes. Lahore tax offices received 13,635 returns and taxes amounting to Rs201 million.

Published in The Express Tribune, December 2^nd, 2010.