Pakistan Assures IMF To Increase Revenue Base

Muhammad Haris

The government has given an assurance to IMF to increase the revenue base, adopt the strict policy, and start door-to-door campaigning and will urge the non-filer retailers to adopt the tax system.

According to the IMF country report released late Friday, it said that the revenue administration improvements to build capacity to expand the tax base and share the tax burden more widely.

To facilitate information sharing with the FBR, the government has amended the Income Tax Rules, 2022 to mandate 145 organizations to share information regularly with the FBR, and will follow the legal procedure for its adoption.

Simultaneously, in line with the IMF’s recent technical assistance (TA) to improve the FBR Compliance Risk Management (CRM) analytical capability, we aim to build a team of staff with advanced data science skills to perform the CRM risk and analytics.

The government has also planned to incorporate predictive and descriptive analytics to fine-tune our CRM case selection procedures.

By December 2023, the government has anticipated having an initial Risk Register in place and plans to develop Compliance Improvement Plans by March 2024.

Moreover, in line with our digitalization plan, by December 2023, we plan to initiate pilot testing of the e-invoicing system.

Contingent revenue measures.

In consultation with IMF staff, implement selected measures:

(i) Raise the GST rate for textiles and leathers tier-1 from its reduced rate of 15 percent to the standard rate of 18 percent, with expected collection of Rs 1 billion per month

(ii) Implement a FED of Rs 5 per kilogram of sugar, expected collection of Rs 8 billion per month. iii) increase advance income tax on the import of machinery by 1 percentage point, expected collection of Rs 2 billion per month.

(iv) increase advance income tax on import of raw materials by industrial undertakings by 0.5 percentage points, expected collection of Rs 2 billion per month

(v) increase advance income tax on import of raw materials by commercial importers by 1 percentage point, expected collection of Rs 1 billion per month

(vi) increase withholding tax on supplies by 1 percent, expected collection of Rs 1 billion per month

(vii) increase withholding tax on services by 1 percentage point, expected collection of Rs 1.5 billion per month

(viii) Increase withholding tax on contracts by 1 percentage point, expected collection of Rs 1.5 billion per month.
Expand our taxpayer base*

In January 2024, The government plans to launch a scheme for door-to-door campaign in four provincial capitals and Islamabad, to register non-filing retailers and streamline their tax filing.SBP Receives $700m from IMF

By cross-referencing tax filings with electricity meter data, The government will detect evasion and conduct audits when required.

The government will implement safeguards in the form of strict supervision through random audits of assessments filed under the scheme to verify correctness of valuations and payments.

The government will launch this scheme with least discretion for the field offices to alter valuations and assessments to protect the potential revenue raised from these actions. To avoid double taxation, monthly advance tax payments under the scheme will offset final income tax liabilities at year-end at the time of return filing, but no refunds of such advance payments of taxes will be issued.

Moreover, the government commits to provide the IMF team with timely monthly data on agreed performance indicators.