ISLAMABAD: Federal Board of Revenue (FBR) Chairman Amjed Zubair Tiwana Friday said new revenue measures taken in the budget (2024-25) would not be withdrawn and enforcement would be the top priority for 2024-25 to meet the assigned revenue collection target of the new fiscal year.

Briefing the National Assembly Standing Committee on Finance, on Friday, on FBR’s performance (2023-24), the FBR chairman said that the tax collection target for 2024-25 could only be achieved when FBR has ample resources with increased enforcement on untaxed sectors.

The enforcement drive would be intensified during 2024-25 to tax those sectors which are out of the tax net or under-paying taxes. There is a trust deficit between the government and the International Monetary Fund (IMF) on the issue of enforcement.

“They say that if the FBR has been unable to do enforcement during the last 70 years, then how the tax machinery be able to do the same now,” he said.

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He said the government does not want to impose sales tax on milk, but we have to due to the IMF. He regretted that the burden of tax had been increased on the salaried class in the budget.

The FBR chairman admitted before the committee that the withholding taxes are imposed to compensate FBR’s weak enforcement. In Pakistan, there are more withholding taxes as compared to the rest of the world. However, the number of withholding taxes has been reduced from 58 to 31.

Responding to a query on real estate sector, he said that the economic slowdown has not only been witnessed in real estate sector, but almost all sectors. He referred to the automobile sector and tobacco industry where economic slowdown has affected their production and sales.

The FBR chairman said the biggest initiative in reforms is to shift FBR Tax Policy Wings from FBR. This reform initiative would be achieved by the deadline of March 31, 2025. The transfer of policy wings from the FBR has been agreed by all stakeholders.

In future, the audit of exporters would only be done after prior approval of the concerned FBR Member. Over 7,000 notices were issued to exporters engaged in domestic sales as well.

During the briefing, the FBR chairman informed that out of Rs4,583 billion direct taxes collection during 2023-24, withholding tax collection stood at Rs2,680 billion, reflecting an increase of 58.47 per cent. Major head of withholding taxes included salary, dividends, interest and exports etc which contributed Rs1,538 billion during 2023-24.

The committee members including Chairman of the Committee Syed Naveed Qamar expressed serious concern over heavy reliance on withholding taxes and stated that if all withholding taxes have been collected in indirect mode, then what is the revenue collected from the FBR’s own effort? The inflation, autonomous growth and additional taxation measures have helped the FBR to achieve the target in 2023-24, but how much revenue FBR has collected from its own efforts, they raised question.

Naveed Qamar said that everyone in Pakistan is operating as a withholding agent as reflected by withholding tax collection during 2023-24.

The FBR chairman responded that the share of withholding taxes has been decreased from 70 per cent to 58 per cent in 2023-24. Direct taxes contribution is around 50 per cent which was traditionally less than 40 per cent. The import taxes now stand at 34 per cent which was more than 50 per cent of total taxes in 2021.

The FBR has collected advance tax of Rs1,462 billion from banks and companies under Section 147 of the Income Tax Ordinance, 2001, through its own efforts, he maintained.

The FBR chairman said that the FBR has achieved target of Rs9,252 billion during 2023-24 and collected Rs9,311 billion, reflecting an achievement of 100 per cent target. Tax-wise breakup revealed that direct taxes witnessed growth of 36.5 per cent; sales tax (19.5 per cent); Federal Excise Duty (FED) growth 56.1 per cent and customs duty witnessed the growth of 30 per cent during 2023-24.

The FBR data (2023-24) further revealed that the income tax target has been achieved by 121.8 per cent; sales tax (85.9 per cent); FED (96.2 per cent) and customs duty target has been achieved by 100.6 per cent.

Copyright Business Recorder, 2024