Pakistan is rampant with tax evasion. With the help of the tax collecting authority, FBR employees, citizens in Pakistan have been living tax free for many decades. Currently FBR collects taxes from only 0.5% of registered tax payers of the total population. Ironically NADRA, which was created many decades after the FBR, has registered 5% of Pakistani’s so far for National Identification. The Government of Pakistan collects taxes indirectly by taxing luxury items like fuel, cigarettes, industries, etc. while compensating budget deficits with loans and grants from other nations and organisations.
During the past many years this tax free culture has helped not only the FBR employees become filthy rich, it has also helped the tax evading businesses and persons to become rich, which has resulted in the expansion of cities and businesses across Pakistan. But with this expansion also comes many problems that are associated with unplanned sudden expansions, like heavy traffic, pollution, water shortages, etc.
For example in Peshawar the 22 KM short commute from one end of the city to the other end would take 4 hours during office hours. But now when the Government of KPK wants to improve the city’s infrastructure they are finding it difficult to find free land to build new infrastructures as all available land is in possession by these tax evading citizens, who have developed their residence and businesses for many years and are not ready to vacate or sell their property at low rates.
This is where the decades of tax evasion can become useful to the current Government of KPK. Using the example of Shop owners of Badami Bagh in Lahore, whose property was bought by the Punjab Government for low rates for construction of the Metro Bus road. This was possible because these shop owners were avoiding taxes for decades by undervaluing their properties in official documents, when sold, to avoid high stamp duty and other taxes. Since the Government uses the property value on record to get the average property rate for the area, these shop owners had to sell their land at 1/4th of the actual value. And there were no protests, as any protest would be tantamount to an admission of tax evasion and could result in arrest and prosecution of the shop owner.
If such actions are taken by the Government of KPK to modernise the infrastructure of the main cities, it would not only help develop the cities, as the new infrastructure would improve the standard of living and economic activities in the city. It would also reduce tax evasion in KPK, as other citizens would want to avoid the situation of selling their expensive property at low rates to the Government and would therefore declare the full value of their property and pay the full amount of tax in the future.
SHAHRYAR KHAN BASEER
Peshawar
Tax evasion is a disease that effects , our ability to get the right amount of taxes owed by the tax payers.Pakistan does not have a tax culture. No on wants to pay the taxes. On top of that the tax machinery is extremely corrupt. Te government knows it but can not do anything ablut it. We do not have enough tax payers on the list.
The tax officials help these evaders to either pey no taxes or low taxes. Property and assets are bought and sold at lesser prices to save money on transfer of te property and on the stamp duty and other fees.
Bulk of tax collection come from indirct taxes. and cause the prices to rise. We must find new tax payers and caching the tax evaders. The Income tax officers have the power to do it but they are more interested in the gtaft than the taxes.
The businesses also save money and evade duties and taxes from under and over invoicing. All this is done with the collusion of the tax officiaks. I served the FBR for number of years, and have seen lot of corruption in the Tax Department. The corrupt officers are known to the higher ups, but they are reluctant to take action against these corrupt employees.
The tax collection is also very low. Bussinesses know the tricks of the trade to save money , instead of paying the correct taxea.. There are strict laws on the book against the evasio of taxes, but no one implements them. A huge leakage of taxes take place.
The governmenthas to show some will to enforce the laws.It should have zero tolerance against the tax evaders, and must punishthem sverely to deter others.
can you give the example of companies doing tax evasion in pakistan
Bhatti
screw you losers
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