Pakistan loses PKR 500 billion due to smuggling: FBR chief

The chairman of Pakistan’s tax collection body — the Federal Board of Revenue — has revealed that the country loses PKR 500 billion due to smuggling.

He informed the National Assembly Standing Committee on Finance and Revenue that the FBR has developed an ambitious transformation plan, which will be implemented from December.

Under this plan, the FBR will establish digital enforcement stations at key locations, particularly on the Indus and Hub rivers and in Balochistan, to monitor and prevent smuggling.

Chairman Rashid Langrial shared that Balochistan’s Chaghi district is the centerpoint of smuggling and the tax collection body has taken up the matter with the provincial government.

Smuggling will be curtailed in the coming months because of a tracking system under the FBR’s transformation plan, he said. Initially, the tracking system will apply on cargos carrying petroleum products.

Tax gap in Pakistan

He added that Pakistan faces a tax gap of PKR 7.1 trillion in 2024–25 and also lags behind peers in the tax-to-GDP ratio. The FBR’s revenue as a percentage of GDP stood at around 10.4-10.5%.

The breakup of the tax gap revealed that sales tax gap stood at PKR 3.4 trillion, income tax gap PKR 2 trillion, and customs duty gap PKR 0.5 trillion, totaling PKR 5.9 trillion.

After including enforcement gap, autonomous growth and other factors, total tax gap stood at PKR 7.2 trillion during 2024-25, he elaborated.

There is an urgent need to request provinces to help in raising the tax-to-GDP ratio, according to Langrial.

The FBR chairman said that the tax collection body has collected PKR 50 billion extra revenue from sugar industry during current year despite less production. This extra PKR 50 billion has been collected without any change in tax rates on sugar industry.

The digital integration exercise resulted in registration of 1,812 businesses having annual turnover of PKR 11.8 trillion. A total of 489 companies are in testing phase and 42 companies are now digitally live, he added.