FBR’s efforts to stop tax leakages commendable, say industry leaders

LAHORE: The government’s recognition and efforts to curb tax evasion across the country are commendable; however, there is still much to be done to achieve the desired results, said Fawad Khan, spokesperson for Mustehkam Pakistan, on Thursday.

He said that recent government data reveals tax evasion in Pakistan has reached an alarming Rs7,000 billion, with approximately half -- around Rs3,500 billion -- lost solely to sales tax evasion. This substantial revenue loss stems largely from unregistered businesses and illicit trade activities, which weaken the national economy.

“The country faces a significant economic crisis due to widespread tax evasion and illegal trade, costing billions of rupees through tax leakages,” Fawad said, adding that the government will struggle to raise the tax-to-GDP ratio to its target of 13 per cent without addressing these issues.

It is worth noting that the DG ISPR recently reported that around 50-60 per cent of cigarettes in Pakistan are sold illegally, resulting in billions of rupees in economic losses. Similarly, former prime minister Shahid Khaqan Abbasi highlighted that billions are lost due to the sale of illicit cigarettes, with government authorities often too weak to collect taxes from these illegal manufacturers.

Fawad added the urgent need for swift action to address these leakages. By effectively closing these channels of tax evasion, Pakistan can move towards economic stabilisation, reduce the tax burden on compliant citizens, and create a fairer economic landscape for registered businesses, he concluded.