Nearly half corporate taxpayers paid no tax in 2016

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ISLAMABAD: The flaws in the country’s weak tax system have been further exposed following the revelation that over 15,000 corporate taxpayers paid no taxes to the Federal Board of Revenue’s (FBR) Inland Revenue department in the tax year (TY) 2016

Though 15,116 companies filed tax returns, which accounts for just over 49pc of all corporate returns filed this year, they paid zero taxes, according to official documents.

While the FBR has claimed that it has 1.2 million people in the tax net who regularly file returns, the total number of corporate taxpayers that filed returns stood at 30,875, as compared to the 81,493 companies registered with the Securities and Exchange Commission of Pakistan (SECP).

Further analysis shows that only 15,759 companies, or 19.4pc, paid income tax in TY2016, meaning that 80.6pc, or 65,734 of the companies registered by the SECP were non-tax compliant.

The tax contribution of the 19.4pc who did pay their taxes was Rs419 billion, or 35pc of the total direct tax collection for TY2016.

Dr Ikramul Haq, a tax expert, told Dawn that FBR had failed to force every company to file tax returns as per law. “This clearly shows poor enforcement on the part of the tax machinery”, he said.

Ironically, he said, SECP had increased the total number of registered companies, but these companies were either dormant or were registered for some future endeavour and have yet to start any business, he said.

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