ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mehmood Langrial said on Thursday that the government has finalised a comprehensive roadmap to raise Pakistan’s tax-to-GDP ratio to 18 percent by FY2027-28 through aggressive expansion of the tax base and structural reforms.
Speaking at a seminar organised by the Pakistan Business Council (PBC) on “Transformation of FBR,” Langrial said Pakistan’s current tax-to-GDP ratio stands at 10.33 percent, while provincial tax contribution remains extremely low at 0.85 percent.
He said the federal government aims to increase the tax-to-GDP ratio to 15 percent through automation, digitalisation, and the track & trace system, while provinces must raise their collective contribution to 3 percent to help achieve the overall target of 18 percent.
FBR Targets 18% Tax-to-GDP Ratio by FY28
The FBR chief said the authority has gathered comprehensive data on individuals and sectors involved in tax evasion. The track and trace system, he added, has curtailed tax evasion significantly—highlighting that until a few years ago, both taxed and untaxed sugar were openly available in the market, whereas now only taxed sugar is being sold.
He pointed out major gaps in the textile value chain, noting that while 1.5 million bales from the spinning sector are documented, the FBR still lacks data on bales produced at Faisalabad’s Sutar Mandi and their end-use or export destinations.
Langrial said widespread tax evasion can also be assessed from the fact that over 90 percent of hospitals accept only cash payments, avoiding traceable banking channels. He revealed that only 150,000 doctors are registered with FBR, and despite their high-income lifestyles—often exceeding over a million rupees per month—they pay an average of just Rs 2 million in annual income tax, which he described as alarming.
Defending the government’s decision to impose a 2 percent tax on exporters, Langrial said it will stay unless evidence shows that the levy is hurting Pakistan’s export competitiveness, in which case it may be reconsidered.
He also acknowledged that the corporate and manufacturing sectors are heavily taxed and said the government recognises the need for tax rationalisation. “There is no justification for taxes like the super tax and high corporate rates, and we are working to reduce them within the available fiscal space,” he stated.
On the occasion, Dr Hamid Ateeq Sarwar, Member (IR Operations), said the government has decided that no new tax amnesty schemes will be introduced, as such schemes only encourage and reward tax evaders.
Earlier, Ali Jan Khan from the FBR’s McKinsey team delivered a briefing on the measures being implemented to curb tax evasion and broaden the tax net.
