ISLAMABAD, March 21: Of the 45,000 registered firms, only 12,000 have filed income tax returns with the Central Board of Revenue (CBR) in the current financial year, showing that most of the firms are evading taxes on their millions of profits.

Of the 12,000 companies filing returns, only 4,000 have shown profits, a similar number suffered losses and the rest filed nil returns during the period under review.

CBR chairman M Abdullah Yusuf said this while talking to officers and staff of the newly-established Regional Taxpayers Office (RTO) at Rawalpindi here on Wednesday.

He said the real crux of the issue is to reach all those potential taxpayers who are not in the tax net.

"We have a narrow tax base. We need to increase the existing number of 1.6 million total return filers to a considerable extent," he asserted.

Mr Yousuf further stated that there were a number of sectors which were not contributing to revenue as per their potential, so there was a huge gap between their contribution to the GDP and revenue.

He said retailers and wholesalers were contributing 16 per cent to the GDP, but their revenue contribution was less than three per cent. Similarly, transporters were contributing 13 per cent to the GDP, but their contribution to revenue was less than four per cent.

He felt that the potential tax contribution of different sectors needs to be analysed carefully and for this a transparent system of enforcement is required to be implemented.

"We need to make a start with the information available with the department. Third party information can also be unlisted to expand the tax base," the chairman remarked.

He called upon the tax officials to make all-out efforts to achieve five per cent growth in tax-to-GDP ratio in the next 10 years as envisaged in the 10-year taxation plan.

Mr Yusuf said the current 10.5 per cent tax-to-GDP ratio of Pakistan was one of the lowest in the region and we, therefore, need to raise it to a respectable level.

He observed that the administrative reforms in the CBR were designed to improve the systems and procedures in a manner to plug all the loopholes and eliminate chances of corruption. Whereas, tax policies were aimed at increasing area of economic and business activity, which ultimately would help increase the tax base.