Thursday, March 31, 2011

The missing tax payers

They travel abroad regularly, live in palatial homes and drive luxury vehicles. They are 2.3-million strong – they are the affluent Pakistanis who are also distinguished because they do not pay any taxes. They don’t even have a tax number, which suggests that these 2.3 million affluent Pakistanis have never paid taxes in Pakistan.

This is about to change, if one were to believe Salman Siddiqui, Chairman of the Pakistan’s Federal Bureau of Revenue (FBR). The FBR has issued notices to the 700,000 wealthiest of the 2.3 million affluent Pakistanis to pony up withheld taxes. Mr. Siddiqui did not elaborate on the penalties for those who would continue  to evade taxes.

From Dawn:


KARACHI: Only 2.75 million Pakistanis, or 1.6 percent of the country’s estimated 160 million people, are registered tax-payers and posses the National Tax Numbers (NTN), FBR report said.

Out of these NTN holders, only around two million people file their returns to the tax authorities, the report said. “The compliance ratio has always been below. The share of taxpayers to population is low when compared with the few selected developing and developed countries, where the share ranges between 4.7percent and 86.4 percent.”

The report said that in India, the share of taxpayers to population is 4.7 percent, in Argentina 16.5 percent, France around 58 percent. “The share of taxpayers belonging to non-corporate sector is close to 99 percent in the total return filers. On the other hand, the corporate sector that contributes around 66 percent in the total income-tax collection has a share of only one percent in the income tax base.”

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