The Federal Board of Revenue (FBR) will increase taxes on digital markets to raise tax collection during the current fiscal year.
The IMF in its latest report, “First Review under the Stand-by Arrangement” revealed government commitments to the fund.
The government has assured that the outcome of the tax diagnosis slated for the second quarter of 2023-24 will play a crucial role in identifying the necessary additional reforms to ensure the achievement of the budget (2023-24) target, as well as establish significant increases in tax-to-GDP over the next year through increased taxation of undertaxed sectors (including retail, property, construction, and development, digital markets) and supportive administration efforts.
The IMF report stated that although the robust revenue performance in the first quarter may mitigate some of this shortfall, achieving the primary deficit target hinges on the effective execution of all budget (2023-24) measures, as well as measures to expand the tax base, including issuing tax notifications to more than 900 thousand non-filers who have already been identified by the FBR.
While internal taxes have performed better than anticipated, the government anticipates they will play a more significant role in tax collection as the year progresses.
It commits to monitoring the performance of the Federal Excise Duty (FED), income tax, including the advance payments and the withholding taxes, and the expansion in the taxpayer base, providing the IMF team with timely monthly data on agreed performance indicators early in the following month.
To enhance revenue administration, including the efficiency of the track and trace system, it will strengthen anti-smuggling efforts, intensify the anti-smuggling campaigns, and enhance checkpoint operations in the northern regions.
Furthermore, the outcome of the tax diagnosis slated for the second quarter of 2023-24 will play a crucial role in identifying the necessary additional reforms to ensure the achievement of the budget (2023-24) target, as well as establish significant increases in tax-to-GDP over the next year through increased taxation of undertaxed sectors (including retail, property, construction, and development, digital markets) and supportive administration efforts, IMF report added.
