Last Updated on: 26th June 2023, 05:36 pm
Federal Govt Assures The IMF That it Will Implement Additional Fiscal Measures of Rs180,000 Cr
The government has made a commitment to the International Monetary Fund (IMF) to introduce additional tax measures of Rs 60,000 crore on beverages.
According to the IMF’s seventh and eighth revisions of the expanded arrangement under the Extended Financing Facility (EFF), released on Friday, the government has shared fiscal contingency measures with the fund, including:
- Immediate increase in GST on fuels before reaching the standard 17% rate
- Further tightening of GST exemptions, including sugary drinks (Rs 60 billion) and other unwarranted exemptions enjoyed by exporters
- Increase EDF for Tier I and Tier II cigarettes by at least Rs 2 per cigarette effective immediately to generate at least another Rs 120 billion in revenue.
The government has also committed to further progress in implementing the track and trace system, which will provide a solid basis for collecting additional revenue, including from tobacco sales.
Authorities also want to bring the service sector, including retail, into the tax net by making better use of data from taxes levied on utility bills in business dealings.
Authorities will seek to add another 300,000 people to the Personal Income Tax (PIT) assessment base, using company withholding tax data, third-party data and surveys to reserve new people. They will also try to bring the service sector, particularly retail, into the tax net by making better use of data (e.g. from the tax on utility bills for commercial connections).
The authorities also pledged to settle a large amount of income tax arrears at Rs.225 billion by the end of July 2022, against the accumulated Rs.377 billion in mid-June (a 70% year-on-year increase due to slow processing).
By the end of June 2022, due to the delay in processing refund applications, FBR has accumulated Rs 366 crore in arrears of income tax refunds, a 67% increase from the previous year. This is in sharp contrast to sales tax arrears, which were paid quickly and regularly, with no monthly arrears constantly piling up.
The FBR said it will settle income tax arrears until the arrears are reduced to Rs 225 billion, reversing the build-up of arrears during this fiscal year. This process will be completed by the end of September 2022.
Also Read: IMF Silent On Floods, But Can Pakistan Expect Favors?
FBR Insurance
The FBR also stated that it remains committed to limiting the future recurrence of these arrears and improving tax administration to increase tax collection efficiency. assured:
- Simplifying tax returns and developing electronic services for taxpayers;
- Expedite the processing of returns and administrative complaints
- Strengthen the office of the big taxpayers.
The Council further stated that its revenue management priorities include:
- Development of a global compliance strategy and establishment of a central risk management unit and a compliance risk management committee at a central level
- Systematic identification and assessment of compliance risks
- Adopt a more project-based approach to address specific high-risk areas of tax compliance
- Strengthen data collection and analysis
To support GST harmonization, FBR implemented a single login portal in December 2021 Taxpayer Trust. added the IMF report.
Also Read: Realignment Of The IMF Program To Rebalance The Economy, Says PM Shehbaz