Karachi, September 23, 2024 – A growing sense of urgency has gripped taxpayers in Pakistan, as individuals and businesses rush to attain “active taxpayer” status to avoid severe repercussions from the Federal Board of Revenue (FBR).
The scramble for compliance has been underscored by the latest update to the Active Taxpayers List (ATL), which reflects a marked increase in the number of filers.
In a significant uptick, approximately 70,000 new taxpayers gained active status over the past week, highlighting the growing momentum towards compliance. According to the FBR’s latest ATL for the 2023 tax year, which was released on Monday, the number of active taxpayers surged to 5.67 million as of September 22, 2024, a notable rise from the 5.6 million registered just a week earlier.
The ATL, updated weekly, provides a comprehensive snapshot of the individuals and entities that have filed their tax returns. The latest update is based on returns filed for the tax year 2023, with the initial ATL for that period, issued on March 1, 2024, comprising 3.35 million taxpayers. The sharp increase over the intervening months is a testament to the effectiveness of recent measures aimed at broadening Pakistan’s tax base.
A significant driver of this surge has been the reforms introduced in the Finance Act of 2024, which imposed higher tax rates and stringent penalties on non-compliance. According to officials within the FBR, these reforms have compelled a wave of previously non-compliant individuals and businesses to file their returns. The threat of steeper penalties for non-filers, along with incentives for timely submission, has resulted in a substantial boost in the number of active filers.
“The rise in active filers reflects our ongoing efforts to widen the tax net and promote compliance,” said a senior FBR official. “We aim to create a culture where tax filing is the norm, not the exception.” He added that the FBR’s reforms are part of a broader strategy to transform the country’s tax landscape and ensure that all economic participants contribute fairly to the national exchequer.
The Pakistani government has set a bold target of increasing the number of active taxpayers to 10 million, as part of its long-term fiscal strategy aimed at bolstering the country’s tax-to-GDP ratio. Broadening the tax base is viewed as an essential step towards fostering economic stability, improving fiscal transparency, and reducing reliance on external borrowing. By encouraging a larger proportion of the population to meet their tax obligations, the FBR is laying the groundwork for a more sustainable financial future for the country.
Since the ATL’s initial publication, the FBR has diligently updated the list on a weekly basis, and the steady increase in taxpayers is seen as an encouraging sign of progress. The latest surge coincides with the looming September 30, 2024, deadline for filing income tax returns for the current year. FBR officials anticipate a further rise in compliance as the deadline approaches, spurred by newly imposed penalties for late filers.
The increase in active taxpayers signals a promising shift in Pakistan’s fiscal landscape, driven by the government’s focus on enforcing tax compliance and enhancing the efficiency of its revenue collection mechanisms. As the country transitions towards a more transparent and resilient tax system, the FBR remains committed to expanding the tax base and ensuring compliance across all sectors of the economy.
The recent achievements underscore the government’s broader fiscal agenda of fostering self-reliance, reducing the fiscal deficit, and promoting long-term economic growth. In doing so, Pakistan aims to strengthen its fiscal responsibility and reduce dependency on international financial assistance.
