Islambad: The Federal Board of Revenue (FBR) has raised concerns over significant disparities in tax compliance during FY 2023-24, highlighting the urgent need for reforms and trust-building to enhance the tax system’s effectiveness.
According to the FBR’s latest report, there are 4.74 million active income tax filers compared to just 234,193 sales tax filers, exposing a considerable gap in tax participation. Regional Tax Office (RTO) Lahore emerged as the leader, with 809,131 active income tax filers and 41,783 sales tax filers. RTO-II Karachi and RTO Multan followed in income tax compliance, while RTO-I Karachi ranked second in sales tax filing. In contrast, Limited Tax Offices (LTOs) in Multan and Islamabad reported lower figures due to their specialized focus on specific taxpayers.
FBR Chairman Rashid Mahmood, in the report, emphasized the board’s commitment to restoring trust through taxpayer-friendly systems, open dialogue with stakeholders, and reforms aimed at broadening the tax base. Key initiatives include the harmonization of sales tax returns across jurisdictions through a single portal and end-to-end digitalization of tax processes to simplify compliance and improve efficiency.
During a recent review of the Tax Laws (Amendment) Bill, 2024, in the Senate Standing Committee on Finance, Finance Minister Muhammad Aurangzeb acknowledged the public’s hesitation to interact with the FBR due to credibility issues. “Many taxpayers are willing to contribute more but are reluctant to engage with the tax authority. Rebuilding trust and credibility is essential to bridge this gap,” the minister remarked.
The FBR report also highlighted strong performance in urban centers like Lahore, Karachi, and Faisalabad, while smaller regions like Sialkot performed relatively well in proportion to their size. These trends underscore the need for targeted efforts to expand sales tax compliance in regions with high income tax participation.
With these reforms and a renewed focus on fostering trust, the FBR aims to close compliance gaps and modernize the tax system, paving the way for a more robust revenue base.
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