IMF set tax collection target surpassed by Pakistan

Imf-set-tax-collection-target-surpassed-by-pakistan

With more than Rs. 4.44 trillion in tax revenue collected in the first half of this fiscal year, Pakistan has satisfied one of the primary requirements set forth by the International Monetary Fund (IMF) for the final $1.2 billion loan tranche.

Pakistan Surpassed IMF Set Tax Collection Target

The tax authorities have also made the decision to begin cutting off the utility and cell phone connections of those who do not file income tax returns beginning the following month in an effort to increase the tax base to over six million people for this fiscal year.

For the July–December fiscal year, the IMF had set an indicative tax collection target of Rs. 4.425 trillion.

It is one of twelve requirements Pakistan must fulfill in order to be eligible for the last $1.2 billion loan tranche, which is scheduled to be negotiated in February or March.

The Federal Board of Revenue (FBR) has collected Rs. 4.440 trillion up to the last working day of the month, which is Rs. 1.15 trillion or 35% more than what was collected during the same period of the previous fiscal year.

The tax authorities intend to collect an additional Rs. 50 billion in revenue over the next two days, and the FBR offices and banks will open on the weekend as well.

Regular Tax Updates To IMF

As per the agreement made with the IMF, the FBR would provide the global lender with regular updates regarding its revenue collecting status.

If there is a monthly revenue deficit, the FBR will impose contingency measures, such as removing sales tax exemptions and imposing excise duties.

Despite a decline in imports, the tax machinery expected to reach the Rs. 9.415 trillion yearly objective thanks to the FBR’s remarkably successful management thus far.

Poor individuals have significantly affected by low tax collection, which has persisted as a persistent problem due to taxation’s biased indirect approach.

With improved real estate and commercial bank collection, this trend has also reversed, with the share of direct taxes rising to 48% in the first half of current fiscal year.

Once more, the FBR only reached its targets for income tax and federal excise duty (FED) out of the four categories of taxes: sales tax, income tax, federal excise duty, and customs duty.

In the first half of current fiscal year, income tax collection increased by Rs. 730 billion, or nearly half, to Rs. 2.13 trillion.

Over Rs. 335 billion in income tax was collected, which more than made up for the sales tax and customs duty targets that were missed.

Weakest Tax Collection Area

The weakest sector continued to be sales tax, which collected over Rs. 1.5 trillion, an increase of Rs. 250 billion, or 20%, over the previous fiscal year.

However, because of a slow development in tax revenues at the import stage, the sum was Rs. 220 billion less than the target.

Nevertheless, at the import stage, the FBR was able to collect about 60% of its sales tax.

With a 65% rise, the FBR collected Rs. 265 billion in FED. It was 105 billion rupees higher than the previous fiscal year.

The amount of customs tax collected fell approximately Rs. 100 billion short of the target.

Customs duty received by the FBR was Rs. 540 billion, an increase of Rs. 81 billion over the previous year.

Still, the FBR’s effort to broaden the tax base is proceeding slowly.

It has only received 3.6 million income tax returns thus far; in order to fulfill the commitments made to the IMF and the Special Investment Facilitation Council, that number must be increased to 6.5 million by June 2024.

Action Against Non-Filers

According to FBR Chairman Malik Amjad Zubair Tiwana, the agency will release a new circular next month listing all the names of people whose mobile phone, gas, and electricity connections will cut off as a result of their failure to file the returns.

The chairman stated that it is now time to take action against those who did not file income tax returns, as per the law, they had until December 28th to do so.

The law gives the FBR the power to cut off a person’s gas, electricity, or SIM card if they are legally obligated to file their returns but fail to meet their other legal obligations.

To read our blog on “IMF wants from Pakistan to increase tax on salaried class,” click here.

Asad Hassan
Exit mobile version