Minimizing compliance gap will help govt lower tax rates, says FBR chief

ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial on Wednesday stated that efforts are under way to minimise the tax compliance gap, which could help reduce tax rates further.

In an exclusive interview with the Geo News programme “Aaj Shahzeb Khanzada Kay Sath”, he said that the enforcement measures would fetch Rs389 billion, and it requires the help of the legislature to approve certain measures proposed in the Finance Bill 2025-26. If not agreed and convinced about enforcement, it might result in increased taxation measures in the budget. The FBR chief admitted that salaried class was bearing more tax burden in country. He said that the enforcement measures would be extended to other sectors after the country witnessed a positive outcome of similar actions in the sugar sector.

His statement came a day after the federal government unveiled the Rs17.57 trillion ($62.24 billion) budget. The budget targets higher revenues and a significant reduction in the fiscal deficit under IMF-backed reforms.

The top FBR officer said that the revenue board saw a roughly 39 percent increase in taxes from the sugar sector via enforcement measures, without any changes to the tax rate or any difference in sugarcane production. “It was a test case for us [to make sugar mills comply with tax measures] in which we have succeeded,” said Langrial. The 39 percent increase in tax proved that there was a compliance gap, he added.

The FBR chief said some sugar mills shut down production after 100 percent monitoring.

He detailed that the FBR used digital means and intelligence sources to monitor the sugar mills, besides strict monitoring of the revenue board’s team.

He went on to say that enforcement measures would be taken against the poultry and beverages sectors in the upcoming fiscal year. He added that the FBR will hold foolproof monitoring of production.

The FBR prepared a priority list to improve enforcement in different sectors, he said. “The way the government is working this year, I am confident the mafia will not be able to succeed,” claimed Langrial. He also hoped that the country would not face a revenue shortfall in the upcoming fiscal year.