Pakistan Needs to Boost Tax Collections

May 3, 2012 Taxation in Pakistan

SarahISLAMABAD – Pakistan is looking at new measures to boost tax revenues, as the country continues to miss its own tax collections targets.

On May 1st the members of the Tax Reforms Coordination Group (TRCG) met with representatives of the Federal Board of Revenue (FBR) of Pakistan to discuss the current state of tax collections in the country and the potential changes to tax policy which could be implemented in order to boost tax revenues.

The chairman of the meeting the Federal Minister for Finance Abdul Hafeez Sheikh emphasized to the FBR and the TRCG that Pakistan needs to greatly increase its levels of tax collections in order for the country to meets in tax revenue target of PKR 1952 billion. The FBR revealed at the meeting that during the first 10 months of the fiscal year tax collections in Pakistan had only reached PKR 1 424 billion. In April the FBR collected a provisional amount of taxes of PKR 158 billion, compared to the target of PKR 187 billion. It was agreed that the FBR would send the Minister detailed daily reports regarding the progress of the tax collections.

In the run up to the end of the fiscal year, the FBR has pledged to dedicated greater resources to pursue taxpayers who do not comply with their obligations to pay withholding tax, one of the major sources of revenues for the government. The FBR will also launch an nationwide campaign to improve taxpayers’ understanding of their obligations to pay withholding tax.

At the meeting the FBR and the TRCG discussed current proposals for new policies and projects aimed to facilitate greater development of business in Pakistan, to reduce the overall costs of operating a business, to optimize tax legislation and promote greater levels of tax collections. Both groups agreed to finalize their proposals and put them forward to be introduced in the next government budget, which is scheduled to be revealed in late May.

Photo by HelpAge