Pakistan’s new taxpayer registrations decline, nil filers surge

Pakistan's tax authority has registered 0.45 million new taxpayers in the first four months of the current fiscal year, with 68% or 0.3 million being nil filers.

This marks a slowdown in new registrations compared to the same period last year when the Federal Board of Revenue (FBR) registered 1.04 million new filers, of which 63% or 0.62 million were nil filers.

According to the latest data, a total of 4.44 million returns were filed for the tax year 2024, with 1.6 million being nil filers. This represents an increase from the previous year, where only 2.2 million returns were submitted by this time for the tax year 2023.

By the end of the tax year 2023, the total returns had reached 6.4 million, with 3.5 million being nil filers.

The surge in income tax returns is also reflected in the admitted tax based on payments. For the tax year 2023, the admitted tax stood at PKR 52.135 billion. However, for the tax year 2024, this figure more than doubled, reaching an impressive PKR 114 billion.

Tax authorities attribute this positive trend to various initiatives aimed at increasing compliance and encouraging taxpayers to fulfill their obligations.

Despite this, the tax shortfall has widened to PKR 606 billion in just eight months of this fiscal year, posing a significant risk to macroeconomic stability.

Analysts believe that instead of increasing tax rates, which fuels inflationary pressures, the government should prioritize expanding the tax base.

This can be achieved through digitalizing tax collection, addressing tax evasion, and integrating the informal sector into the tax net.

Broad-based tax reforms will ensure long-term fiscal sustainability while reducing the disproportionate tax burden on lower-income households.