ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial announced a wide-ranging reform of Pakistan’s tax compliance system, pledging tougher action against non-compliant sectors, expanded digital surveillance, and long-awaited corrections in the tobacco, retail, and passive income tax regimes.
Langrial cited the recent enforcement campaign in the sugar industry as a model for future efforts. “Without changing tax rates, our enforcement in the sugar sector led to a 39% rise in tax collection,” he said, noting that similar efforts are now being extended to other high-risk sectors.
“The non-compliance story in the tobacco industry is about to change — just as it did in sugar,” he stated confidently.
Langrial admitted that simply raising taxes on the formal economy often pushes activity into the informal sector. Instead, he said, the government is now directly targeting businesses that fail to meet compliance standards. “Non-compliant sugar mills have shut down under our monitoring. We’re now achieving near-total compliance in many regions,” he added.
To combat internal corruption, Langrial revealed that the Intelligence Bureau (IB) has been assigned to monitor FBR staff. “With the IB’s support, we’ve taken disciplinary action against several corrupt officials within our own ranks,” he said.
Turning to the poultry industry, Langrial noted early findings showed significant tax evasion. “Just one month of monitoring revealed millions in unpaid taxes,” he said, adding that similar scrutiny would continue across other sectors.
Addressing passive income taxation, Langrial pointed to a revised policy that sets a 15% tax on passive income — compared to the 29% levied on active income. He explained this move is aimed at correcting a bias that disincentivizes business investment.
Responding to criticisms comparing taxation in the salaried and construction sectors, Langrial called such comparisons misleading. “There’s a salaried component even within construction. It’s inaccurate to compare income types with entire sectors,” he clarified.
“The core idea is this: if someone has Rs50 million in a bank account, they should pay 15% tax on the passive income. This is about addressing the imbalance between those who invest and those who only earn passively,” Langrial concluded.
