Islamabad: A report from the World Bank reveals that out of the 114 millionemployed individuals in Pakistan, only 8 million are registered for incometax.
According to the details in the report, the World Bank has publishedfindings on tax reforms, suggesting that implementing income tax reformscould increase the tax contribution to the economy by 2% from direct incomeand 1% from agricultural income.
The report states that there are 114 million employed individuals inPakistan, with only 8 million registered for income tax. Direct taxescontribute only 33% to tax revenue, with a larger portion of tax revenuecoming from indirect taxes.
The World Bank noted that the lower tax rates for real estate have led toincreased investment in the sector, while capital investment is relativelylow in the manufacturing sector due to higher taxes.
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According to the report, tax rates on land in Pakistan are low, and vacantplots in cities are more attractive for investment. The World Bank alsohighlighted that 90% of farmers in Pakistan do not pay taxes, andagricultural land is often used for purposes other than farming,contributing to income.
The tax system in Pakistan has been complex, and the lack of clarity in taxmatters between federal and provincial levels, along with overlappingresponsibilities, has affected tax collection.