Only 0.3% Pay Direct Tax in Pakistan

August 27, 2015 Taxation in Pakistan

ISLAMABAD – More people are flying in an airplane at any given time then there are people paying direct taxes, such as income taxes, in pakistan in a year.

Pakistan suffers from endemic tax evasion, corruption, and inefficiencies in tax administration, leading to a poor tax-to-GDP ratio, according to information in a new report issued on August 26th by the Research and Advocacy for the Advancement of Allied Reforms.

Currently it is estimated that only 0.3 percent of the entire population of Pakistan are paying any direct taxes, a level which is equivalent to approximately 500 000 people out of a total population of 170 million.

It was specifically noted that at any given time there are more people in the world who are aboard an airplane, then there is people paying direct taxes in Pakistan in a whole year.

Pakistan currently has a tax-to-GDP ratio of 9.4 percent, one of the lowest in the world.

The poor tax performance has been attributed to a pervasive “non-tax culture”, which itself is caused by persistent tax evasion, corrupt tax officials, and significant inefficiencies of the tax authorities in their efforts to collect and to fight tax evasion.

Photo By: Keith Williamson