A notable trend is emerging in Pakistan, where citizens are rushing to become tax filers and secure a spot on the Active Taxpayers List (ATL) in response to the unprecedented increase in electricity bills, as reported on August 28.
The Federal Board of Revenue (FBR), Pakistan’s top tax authority, recently unveiled the updated ATL for the tax year 2022, revealing an exceptional inclusion of approximately 4.5 million individuals and businesses. This substantial increase is attributed to citizens proactively submitting annual declarations to mitigate the impact of higher income tax rates.
The rationale behind the heightened withholding income tax rates for those not on the ATL has motivated individuals to actively seek recognition by tax authorities.
The recent electricity bills, which carry significant tax components, especially for non-ATL individuals, have provided added incentive for this movement.
The FBR’s weekly update to the Active Taxpayers List (ATL) on Monday covered the names of entities that filed tax returns for the tax year 2022 up to August 27, 2023.
The surge in active taxpayers is a result of well-executed initiatives that have pushed non-compliant entities into the formal tax documentation framework. Government-led efforts to encourage tax compliance while discouraging non-filers have been instrumental in achieving this milestone.
The latest ATL update, encompassing returns submitted until August 27, 2023, revealed that the FBR received a remarkable 70,000 returns in the preceding week. The introduction of a significant measure via the Finance Act of 2023 played a pivotal role in boosting tax return submissions.
The consistent drive by the FBR to foster tax compliance through mechanisms like the ATL and digital tax systems has yielded favorable outcomes. These initiatives have not only streamlined the tax collection process but also increased transparency within the tax structure.