Reduction in number of active taxpayers raises concerns

KARACHI: The Federal Board of Revenue (FBR) has reported a staggering 41 percent drop in the number of active taxpayers for the tax year 2023, setting off alarms about Pakistan’s tax compliance and revenue collection efforts.

The newly released Active Taxpayers List (ATL) for 2023 shows only 3.35 million active taxpayers filed returns, a drastic decline from the 5.7 million who filed for the 2022 tax year. This precipitous fall has raised concerns among tax professionals and monitoring agencies about potential misreporting and the future of the country’s tax system.

The Pakistan Tax Bar Association (PTBA) has taken notice of the discrepancy, firing off a letter to the FBR chairman. “We are depressed to see the sharp fall in active taxpayers from 5.7 million for 2022 to just 3.35 million for 2023,” wrote the PTBA. “The low number has been negatively perceived and there must be some misrepresentation that needs rectifying.”

The PTBA suggested that the ATL 2023 likely excludes late filers and those who filed for extensions after the due date. It has proposed the FBR revise the list to include breakouts of active filers, non-active filers, and total filers for better transparency.

Meanwhile, tax experts were of the view that if the plunge in active filers was not misreported then it could have a serious impact, especially at a time when Pakistan faces an economic crisis with spiking inflation and a faltering economy.

They said that it would add more pressure on the newly elected government to take further harsh measures and cut funds for public sector development initiatives. Furthermore, they said that the drastic decline has reignited the long-standing concerns about FBR’s efficiency in dealing with tax evasion challenges transparently.

Copyright Business Recorder, 2024