ISLAMABAD: The Federal Board of Revenue (FBR) is projecting tax-to-GDP ratio at 12 percent in three years after slippage of the ratio to a single digit in 2019/2020.
According to a report, the FBR’s collection to the GDP has been dropped to 9.6 percent in fiscal year 2019/2020, which the tax authorities realized that the ratio was not sufficient to expenses of the country.
With the ambitious revenue collection targets, the FBR is projecting tax to GDP ratio at 10.9 percent in fiscal year 2020/2021; 11.6 percent in 2021/2022 and 12 percent in 2022/2023.
The FBR said that although the projected tax to GDP ratio is much lower than the benchmark of 15 percent set by the IMF for developing countries. However, achieving the projected ratio is much needed to generate revenue for development and current expenditures of the government.
To enhance the tax-to-GDP ratio the FBR said it would rely on ongoing reform program, which actually aimed at increasing the ratio to 15 percent.
The reform program included introduction of mobile phone application to attract more taxpayers. The FBR said that it had launched an online registration program for simplification/automation of registration of sales tax and income tax. “However, biometric verification has been outsourced to NADRA in order to avoid any contact between tax collector and taxpayer,” the FBR added.
The FBR said that major component of the reform program is broadening of tax base. It said that data had been obtained from power distribution companies and gas companies for broadening of tax base: data of more than 3.5 million industrial and commercial users gathered; notices had been issued all such consumers nudging them from registration; and in first place enforcement action taken against industrial consumers for mandatory registration.
The FBR said that to achieve desired tax to GDP ratio, it had data bank and captured transactions such as bank, vehicles and real estate, which would be utilized in coming days to bring persons having taxable income into the tax net.
The FBR said that due to enforcement measures taken during past couple of years the number of income tax return filers reached to record level.
In sales tax, the FBR said it had obtained details of industrial and commercial consumers from power distribution companies which are being utilized for registration of those traders had connection sin either category but were not registered for sales tax.
Some of the major initiatives are included: identifying and check evasion by High Net worth Individuals; Plaza Mapping at Lahore, Karachi and Islamabad; Launch of Device Identification, Registration and Blocking System (DIRBS) to control smuggling of mobile devices; Discouraging imports of luxurious goods through additional Regulatory Duties (RDs); Forensic audit in Sugar, Tobacco and Steel Industries to address leakages and tax evasion in these industries.
The FBR highlighted many other initiatives taken in sales tax and customs which were aimed at boosting revenue shortest possible time.
