FBR Wants More Tax From Non-Filers

The Federal Board of Revenue (FBR) has decided to take policy and enforcement measures of Rs. 60 billion including additional taxes from non-filers to overcome the revenue shortfall of Rs. 22 billion in October 2022.

Sources told ProPakistani that the FBR is not working on any new taxation measures, but some taxation measures of the Finance Act 2022 have not been fully implemented and enforced.

Some big measures taken under the Finance Act 2022 against the non-filers have not been enforced yet but it has been decided to strictly enforce the said measures

The revenue would increase following proper enforcement of these measures by the exchange companies and banks. The FBR collected Rs. 512 billion in October 2022 against a target of Rs. 534 billion, reflecting a shortfall of Rs. 22 billion. If the FBR fails to meet the target of November, then contingency measures would be taken immediately.

The FBR requires growth of 21.5 percent in revenue collection to meet the annual target of Rs. 7,470 billion for 2022-23 as compared to the tax collection in the previous fiscal year. Recently, FBR Chairman Asim Ahmad directed Chief Commissioners Inland Revenue of Karachi to enforce the collection of higher rates of withholding taxes by banks from those not appearing on the Active Taxpayers List (ATL).

Under the Finance Act 2022, every banking company will collect this adjustable advance tax at the time of remitting money outside Pakistan on behalf of a person who has completed a credit card, debit card, or prepaid card transaction with a person outside Pakistan.

The rate will increase by 100 percent in the case of persons, not on the ATL. Two new sub-sections (1DC) and (1DD) have been inserted in section 152 of the Income Tax Ordinance. Under sub-section (1DC), service charges/commission/fee, by whatever name called, paid by an exchange company licensed by the State Bank of Pakistan (SBP) to a non-resident person has been brought under the tax net.

Now, these exchange companies have been made liable to deduct tax at the time of making payment of service charges or commission or fee to the global money transfer operators, international money transfer operators, or such other persons engaged in international money transfers or cross-border remittances for facilitating outward remittances.

Similarly, under sub-section (1DD), every banking company has been made liable to deduct tax at the time of making payment to a card network company or payment gateway or any other person, on any transaction fee or licensing fee or service charges or commission or fee by whatever name called or interbank financial telecommunication services.

The government has committed to the International Monetary Fund (IMF) to take contingency measures at the earliest signs of fiscal program underperformance including

• An immediate increase in the general sales tax (GST) on fuel, as a prelude to reaching the standard rate of 17 percent;
• Further streamlining of GST exemptions including sugary drinks (Rs. 60 billion) and other unwarranted exemptions such as those benefiting exporters;
• Increasing Federal Excise Duty on Tier I and Tier II cigarettes by at least Rs. 2 per stick with immediate effect to raise at least another Rs. 120 billion in revenue.