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IMF wants up to Rs100b increase in FBR tax collection

IMF wants up to Rs100b increase in FBR tax collection

ISLAMABAD: The International Monetary Fund (IMF) has asked the Pakistani government to increase FBR’s tax collection up to Rs100 billion in a bid to materialise the real potential of tax collection machinery.

“The IMF wants to increase the FBR target by Rs70 to Rs100 billion as discussions are underway to finalise the target in line with the real potential of the FBR. The IMF mission has shown dissatisfaction over the FBR move to broaden the tax base through issuing notices to high net worth value individuals,” official sources said.

“The financing of the programme will be standing in the range of $5 to $6 billion as it is the due amount Islamabad has to pay back to the IMF on account of previous loans which were obtained during the tenure of last PML-N-led regime,” said the official.

The official sources said that the ongoing crackdown launched by FBR against potential tax evaders had so far proved eyewash because so far out of total sent out tax notices to few hundreds, over 40 percent notices returned back because of invalid postal addresses. The generated tax demand could actually bring few billion rupees maximum so there would be no real potential for increasing tax to GDP ratio through this ongoing campaign. The FBR will have to change its policy to make broadening of tax base exercise as successful. The IMF team knew very well that the FBR sent out 300,000 tax notices during the last IMF programme in three years but it fetched only couple of billion of rupees into national kitty as taxes.

When the FBR officials were reminded about failure of last scheme which was launched under IMF programme from 2014-15 to 2016-17, the official said that this programme was not pursued effectively that resulted into meeting failure.

An FBR official said that the Ministry of Finance would now finalise FBR tax collection target as the tax machinery did not even know how to collect the original target of Rs4398 billion at a time when the tax machinery was facing a shortfall of around Rs60 billion in first four months (July-Oct) period of the current fiscal year.

“Instead of downward revision in tax collection target, the IMF wants jacking up the FBR target up to Rs100 billion on the ground that the government raised duties in supplementary budget so the FBR must collect in order to materialise its real potential,” sources quoted the IMF team as saying during the parleys.