Fake invoices and judicial reliefs undermining FBR’s efforts.
Revenue target up 40 pc but fraud prevention weak: Mian Zahid Hussain
Staff Report
ISLAMABAD: The Chairman of National Business Group Pakistan, the President of the Pakistan Businessmen and Intellectuals Forum, the President of All Karachi Industrial Alliance, the Chairman of the FPCCI Advisory Board, and the President and former provincial minister, Mian Zahid Hussain, said on Friday that the increasing incidents of tax fraud in Pakistan have become a significant threat to the economy.
Quoting the FBR Chairman, he revealed a shocking truth-the annual tax fraud in Pakistan surpasses 700 billion rupees, with the use of fake invoices being a major contributor.
Mian Zahid Hussain underscored the urgent need for digitalization in the fight against tax fraud. He pointed out that the level of sales tax fraud in Pakistan is dangerously higher compared to regional countries, and the use of fake receipts and invoices, despite system reforms, remains a persistent issue that can only be effectively tackled with complete digitalization.
Speaking to the business community, the veteran business leader said that tax fraud is a disease that resurfaces even after complete treatment. He mentioned that 200 billion rupees were recovered during the last fiscal year as a result of court decisions. However, recent investigations revealed that several major companies have committed tax fraud worth Rs 3.4 trillion.
Mian Zahid Hussain stated that despite all efforts, only partial control has been achieved over sales tax fraud as its elimination requires strict punishments and a rigorous audit system. He stated that the FBR has been granted new powers, however, if individuals repeatedly arrested continue to receive immediate relief from courts, these efforts will remain ineffective.
He stated that the business community is protesting against the new powers granted to the FBR. They believe that these powers will be misused and will be applied to taxpayers instead of tax evaders. If concrete measures are not taken to expand the tax base and combat fraud, achieving budget targets will be impossible, and existing taxpayers will be squeezed, forcing the government to introduce a mini-budget, he warned.
Mian Zahid Hussain stated that, according to the IMF, offshore tax havens result in a loss of $ 500 to $ 600 billion annually in corporate tax revenue worldwide. In comparison, individual-level tax evasion causes an additional loss of approximately $ 200 billion. According to some estimates, more than 30 percent of tax revenue is lost annually due to fraud in the SAARC region. Pakistan’s underground economy accounts for approximately 60 percent. In comparison, around 43 percent of registered taxpayers report zero income, highlighting flaws in the tax system.
