FBR officials identified as non-filers
In the past two years, an alarming revelation has emerged regarding the Federal Board of Revenue (FBR) in Pakistan – more than 10,000 of its employees have been identified as non-filers of income tax returns. This situation has raised significant concerns about the effectiveness of efforts to formalize the economy and broaden the tax base, especially when the very organization responsible for tax collection struggles to ensure compliance among its own workforce in the tax years 2022 and 2023.
This trend of non-filing is particularly widespread among officials below grade-17 nationwide. Despite this high incidence, the FBR has yet to take action against these non-compliant employees.
The FBR’s total workforce comprises 25,000 individuals across the country, with officers above grade 17 numbering 1,700. In 2022, the number of non-filers among officers of grade 17 and above exceeded 500, slightly decreasing to around 300 in 2023. Even with a special extension until December 31, only 1,400 officers in this category filed their tax returns for 2023, highlighting persistent tax non-compliance among higher-grade officers.
For the tax year 2023, the Inland Revenue Service reported an 88 percent compliance rate among officers, while the customs group officer category showed an 80 percent compliance rate. The relatively high compliance rate for 2023 is attributed to the special extension granted by the FBR chairman, allowing employees until December 31 to file their returns, compared to the standard deadline for ordinary citizens, which expired on October 31.
Among officials below grade 17 across the country, the non-compliance rate for tax return filing ranges from 60 percent to 70 percent. This category comprises approximately 23,300 employees nationwide, with an estimated 10,000 employees consistently failing to file their returns, according to official estimates.
A recent audit conducted by the Chief Commissioner of the Regional Tax Office-1 in Karachi revealed that nearly 307 officers failed to file their tax returns for 2022 and 2023. If this audit were expanded to cover 22 Regional Tax Offices (RTOs), two Corporate Tax Offices (CTOs), and three Large Taxpayer Units (LTUs), the number of non-compliant officials could potentially reach into the thousands.
The FBR has issued a stern warning that those failing to file returns before December 31 will face penalties. However, the prevailing levels of non-compliance within the FBR itself raise concerns about the possibility that these non-compliant officers may be contributing to the widening of the country’s already narrow tax base. This issue underscores the need for a comprehensive strategy to address tax compliance, even within the tax collection agency, to strengthen Pakistan’s revenue collection efforts and promote fiscal responsibility.