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Tax growth recorded at 16.3% in first six months
The tax collection in first six months stood at Rs 2,083 billion which is 16.3% higher than that of last years, according to a press release issued by the Federal Board of Revenue. It is the highest growth rate since 2015-16 and FBR has made great efforts to attain the growth despite rather subdued economic […]
The tax collection in first six months stood at Rs 2,083 billion which is 16.3% higher than that of last years, according to a press release issued by the Federal Board of Revenue. It is the highest growth rate since 2015-16 and FBR has made great efforts to attain the growth despite rather subdued economic activity.
The original target of Rs 2,367 billion was revised to Rs 2,197 billion in view of import compression in the first quarter. The trend has continued for the second quarter. This compression of over five billion dollars has on one hand improved the current account situation but on the other hand adversely effected the usual revenue resources of the government.
An estimated loss of Rs 56 billion of taxes is incurred on every billion dollar of import compression. The FBR has redoubled its efforts on domestic side and has managed to shift its tax dependence on import taxes from 56% to a little above 40% this year. With expected upturn of economic activity in last six months and a likely stabilisation of imports, it is expected that the FBR is going to collect an unprecedented amount of taxes this year without disrupting and distorting economic activity.
Meanwhile, another statement issue by the FBR said the Tax Amendment Ordinance has made corrections in law to accommodate reasonable demands of the traders. Since CNIC disclosure of every sale is a major requirement of law now, the traders were rightfully demanding a decrease in minimum tax rate as majority of taxpayers were earlier paying the minimum tax on grossly suppressed sales. In order to encourage correct declarations, the rate of minimum tax has been rationalised.
Similarly medium-sized traders have been absolved from their liability as withholding agent to increase ease of doing business. The trade associations have committed to get all medium and large sized retailers registered with income tax. The association has also nominated their representatives to evaluate turnover of under declaring business and have also joined hands with FBR for dispute resolution in audits.
The FBR considers that the future of taxation lies in collaboration with taxpayers as opposed to confrontation. It is likely that this arrangement will achieve a win win situation for traders and FBR in achieving goals of documentation and reasonable taxation without creating fear and distorted economic behaviour.
