Federal Board of Revenue (FBR) has set the target of tax-to-GDP ratio at 10.9% for the financial year 2020-21—a much improved level from the outgoing financial year in which the tax-to-GDP ratio fell to single digit at 9.6%, according to a report Revenue Division Year Book 2019-20.
The enhanced set target showed the improvement in revenue collection due to resumption of business and economic activities across the country, and the improvement of enforcement by the tax collection authority.
FBR collected over Rs. 1 trillion taxes in the first quarter of the current financial year, showing a growth of 3.5% or Rs. 34 percent in the collection of tax values year-on-year.
The authority claimed that it has taken various measures to curb tax evasion in different parts of the countries besides it has introduced various reforms to generate untapped tax from different sectors.
During the first quarter, smuggled goods worth Rs. 14.38 billion have been seized as compared to seizures of Rs. 8.4 billion during the corresponding period of 2019.
Furthermore, FBR has launched a full-fledged crackdown against corruption, rent-seeking, harassment, and misuse of authority as about 100 officers and official have been suspended or dismissed.
The authority also initiated quite a few revenue and facilitation-related revitalization measures e.g. establishment of Large Taxpayers Unit Multan and Corporate Tax Office (CTO), Islamabad and Transit Trade Facilitation portal.
The overall tax-GDP ratio of Pakistan during the last five years remained between 11.4 percent and 12.6 percent.
In the outgoing year, the Covid-19 hit and its preventive lockdown has hit the economic activities adversely that resulted in lower collection of taxes across the country.
FBR has projected 10.9 percent tax-to-GDP ratio in 2020-21; 11.6 percent in 2021-22, and tax-to-GDP ratio has been projected at 12 percent for 2022-23.
FBR has been able to collect net tax revenue of Rs.3.996.7 trillion during FY 2019-20, reflecting 4.4% growth over the collection of Rs.3.828.5 trillion realized during FY2018-19. The collection of sales tax, direct taxes and federal excise duty showed positive growth i.e. 9.4%, 5.4% and 5.1% respectively.