Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial revealed significant steps being taken to address tax evasion and strengthen the country’s tax collection framework.
Speaking to the National Assembly Standing Committee on Finance, he highlighted systemic issues that have enabled the black economy to thrive while burdening documented sectors with excessive taxes.
Langrial pointed out that policies allowing non-filers to legitimize undeclared income through higher withholding tax rates have hindered growth. Despite raising tax rates on salaried individuals and other sectors from 2008 to 2024, revenue collection has stagnated, leading to heavy government borrowing for public sector investments.
In a historic move, the FBR has streamlined import declarations, reducing clearance time from 106 hours to just 18 hours for 85% of imports. Yet, challenges remain, as less than 25% of manufacturing units are registered with the sales tax department, with many wholesalers and retailers operating outside the tax net. Moreover, underreporting and misreporting continue to undermine revenue collection.
The FBR has introduced a high-powered incentive regime to improve the efficiency and integrity of tax officials. Under this initiative, officials demonstrating quality output and high integrity will receive salaries up to four times higher than their peers.
The Committee expressed concerns about corruption and capacity issues within the FBR, particularly regarding the Tax Laws (Amendment) Bill, 2024. Highlighting its potential economic implications, members urged the FBR to streamline the registration process, enhance taxpayer confidence, and address controversies in the bill.
To resolve these issues, the Committee appointed a Sub-Committee led by MNA Bilal Azhar Kayani, with representatives from various political parties. The Sub-Committee will engage stakeholders, including the Association of Builders and Developers (ABAD), to propose actionable solutions within 10 days.
The meeting was attended by prominent officials, including Minister of State for Finance Ali Pervaiz Malik, Secretary Finance, Chairman FBR, and members of the National Assembly. The Sub-Committee's recommendations are expected to play a crucial role in addressing tax system inefficiencies and boosting national revenue.
