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Pakistan to profile citizens to combat rampant tax avoidance

(Bloomberg) -- Pakistan will use its national identity database to build profiles of potential taxpayers in a renewed bid to broaden its tax base, Prime Minister Shahid Khaqan Abbasi said.

The plan aims to increase the number of taxpayers in a country where less than one percent of its 210 million people pays taxes. It seeks to plug leakages, encourage correct property valuation, lower individual tax rates and offer an amnesty program, Abbasi said in an interview in his home in Islamabad.

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Shahid Khaqan Abbasi, Pakistan's prime minister, speaks during an interview in Karachi, Pakistan, on Saturday, Aug. 26, 2017. Photographer: Asim Hafeez/Bloomberg

Lenders including the International Monetary Fund have repeatedly shown concern over Pakistan’s tax-to-GDP ratio of about 12 percent, which is among the lowest globally. In the past, attempts to force people to pay taxes have been met with resistance and strikes by businesses, while various amnesty plans announced -- including one eight months ago -- failed to boost revenues. Now Abbasi wants officials to build taxpayer profiles through the National Database & Registration Authority.

“We are fixing the problem with a multi-pronged strategy,” Abbasi said. “You can make money but you cannot hide expenditures. Your telephone bills, utility bills, foreign travels, credit cards spending tell you the whole story.”