Multiple Proposals Under Consideration by FBR to Achieve Tax Target

The Federal Board of Revenue’s (FBR) potential increase in revenue collection target of Rs. 7,470 billion for the fiscal year 2022-23 (FY23) was discussed during ongoing talks between the FBR and the International Monetary Fund (IMF).

On Friday, the FBR and the IMF concluded their first round of technical talks. According to sources, the FBR’s tax collection target has not been changed as of yet.

However, the FBR’s target would be revised based on the precise amount of additional taxation measures to be implemented through the issuance of an Ordinance. The FBR has proposed measures worth more than Rs. 200 billion. The measures to increase the tax-to-GDP ratio were also thoroughly discussed between the FBR and the IMF.

Sales tax on petroleum products

As major revenue-generating measures, the FBR has proposed a 17 percent sales tax on petroleum products or an increase in the standard rate of sales tax from 17 to 18 percent. Through a notification, the FBR can easily impose a sales tax on petroleum products. According to sources, the revision of the sales tax rate would be possible only through an Ordinance.

The FBR has proposed raising the rates of withholding taxes, foreign exchange income tax on banks, capital value tax on vehicles, and Federal Excise Duty on automobiles, beverages, and cigarettes. Other ideas included increased regulatory duties or a 3% flood levy on imports.

FBR officials, when contacted, stated that the FBR will meet the assigned tax collection target of Rs. 7,470 billion by the end of the current fiscal year.

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