ASIA NEWS NETWORK

WE KNOW ASIA BETTER

» Business

Over 2m rich Pakistanis pay no taxes

Publication Date : 04-10-2012

 

There are 2.38 million people in Pakistan who are rolling in wealth, but do not figure on the tax roll at all. They are tax evaders — except for the taxes deducted at source.

Nearly three million people possess a National Tax Number (NTN), but only 1.4 million of them filed income tax returns last year.

Data gleaned from known sources identified 2.38 million people who live in palatial houses, own luxury cars, travel abroad frequently, possess arms, hold multiple bank accounts and pay hefty utility bills, but pay no income tax.

The statistics, compiled by the National Database and Registration Authority, also reveal that tax officials don’t bother to bring these rich people into the tax net, ignoring the fact that one cannot buy a new car without producing NTN.

Section 181 of the Income Tax Ordinance, 2001, allows commissioners of income tax to register a person who earns a taxable income and there are about 90 commissioners across the country.

No wonder Pakistan is known for its low level of compliance with income tax rules and international donors want the country to widen its tax base before asking the world for more aid and help.

Ironically, the Federal Board of Revenue has already borrowed more than US$153 million from donors for reforms in its tax machinery.

Now after carrying out its reform process for over eight years, the FBR still needs an amnesty scheme to bring these influential people into the tax net.

Although Nadra has identified some potential tax evaders, tax officials posted in 19 regional tax offices across the country did not bother to pursue them.

Even more interesting is the fact that there are 1.611 million people who frequently embark on international tours but do not pay a single penny as income tax.

About 584,730 Pakistanis have multiple accounts in domestic and multinational banks, but do not possess NTNs.

The FBR has bound banks to deduct a meagre amount of less than one per cent at source less tax on cash withdrawals of more than 50,000 rupees (US$524) in a day, but it doesn’t issue notices to bring them under the tax net.

Over 56,000 people live in posh areas and more than 20,000 people own luxury cars, but pay no income tax.

It is a fact that prices of a plot of land are in millions of rupees in posh areas of Islamabad, Lahore, Karachi and Peshawar, but income tax officers don’t bother to trace the buyers of these plots and make them pay income tax.

There are 66,736 individual consumers who pay large utility bills, but no income tax.

More than 13,000 people have licences of both prohibited and non-prohibited weapons, but they do not possess an NTN.

There are 25,130 people who are engaged in lucrative professions like medicine, engineering, law and chartered accountancy, but they do not pay a single penny as income tax.

Despite these facts, revenue collection has increased over the past few years, but an official told Dawn that it had become possible because of rupee devaluation, rise in the rate of withholding taxes and some increase in government spending.

 

Mobile Apps Newsletters ANN on You Tube