‘Tax authority taking tech-intensive steps to ensure financial inclusion’

ISLAMABAD: Undocumented economy continues to thrive as more than half of the Pakistanis do not use banking channels and carry out almost all of their transactions in cash; however tax authorities are taking technology-intensive measures to ensure financial inclusion, a senior tax official said on Thursday.

“In Karachi, the biggest metropolis of the country, only 40 percent people do transactions through banks while remaining in hard cash. This excludes the transaction out of the government’s documents and tax net,” Dr Hamid Ateeq Sarwar, member (Inland Revenue, policy) Federal Board of Revenue (FBR), said speaking at a discussion.

The event titled ‘Pakistan Leadership Conversation 2019’ was organised by the Association of Chartered Certified Accountants (ACCA).

Ateeq further said cash currency movement in Pakistan was largest in the region, especially in Karachi where 40 percent people use banking channels, in Lahore it was 35 percent, and in Gujranwala only five percent.

However, he said, with FBR was working on it with in collaboration with State Bank of Pakistan, where the latter was providing the tax authority with the information regarding the bank accounts.

“We feel that this digital information would provide us support in stopping this trend,” the official said.

Ateeq added that it would also help us in increasing out tax to GDP ratio.

“After the current drive against high worth individuals, we would proceed to low worth individuals too. We are doing that sort of analysis and would encourage them to pay tax, without teasing them.

We would send them reminders to pay tax, after that the government can take action.”

At the same time, he said they were also working on ease of doing business in Pakistan, reducing number of taxes payments as well as simplifying return filings.

Irfan Wahab Khan, CEO Telenor Pakistan, said less than 30 percent of Pakistanis have access to formal banking. “We are positive to add more value to customers.

We are working on a plan of digital lending, microfinance, health insurance, receiving international remittances while meeting the international obligations of Anti Money Laundering (AML) and know your customer (KYC),” Khan said.

The Telenor chief said there were 160 million mobile users in the country and in the last five years a tremendous penetration had been achieved. “Our data usage has more than doubled every year in last five years; however, in spectrum allocation we [Pakistan] are the lowest in region.”

He further said according to estimates, 15 percent of the farmers’ incomes have increased due to use of these technologies.

Mobile-based penetration is increasing in e-commerce, for which digital technology and literacy is needed, Khan said.

Shariq Rehman, country managing director, Oracle System Pakistan, said a number of Pakistanis and experts wanted to come back to Pakistan, but at the same time brain drain was also enormous.

Rehman was of the view that digitalisation would help the economy and people a lot.

Dr Abid Qaiyum Suleri, executive director of Sustainable Development Policy Institute (SDPI), said international digital payment gateway i.e. PayPal was needed in Pakistan. Terming digitisation as the indispensable for economic growth, Suleri said that artificial intelligence initiative by the president of Pakistan was a good initiative for the country.