F.P. Report
ISLAMABAD: The Tax Amendment Ordinance has made corrections in law to accomodate reasonable demands of traders, says a Press Release issued by Federal Board of Revenue. Since CNIC disclosure of every sale is a major requirement of law now, the traders were rightfully demanding a decrease in minimum tax rate as majority of taxpayers were earlier paying the minimum tax on grossly suppressed sales. In view to encourage correct declarations, the rate of minimum tax has been rationalized.
Similarly medium sized traders have been absolved from their liabilty as withholding agent to increase ease of doing business. The trade associations have committed to get all medium and large sized retailers registered with income tax. The association have also nominated their representatives to evaluate turnover of under declaring business and have also joined hands with FBR for dispute resolution in audits.
FBR considers that the future of taxation lies in collaboration with taxpayers as opposed to confrontation. It is likely that this arrangement will achieve a win win situation for traders and FBR in achieving goals of documentation and reasonable taxation without creating fear and distorted economic behaviour.
Tax growth of 16.3% achieved in rirst six months:
The tax collection in first 6 months is 2083 billion which is 16.3% higher than last year, says a Press Release issued by Federal Board of Revenue. It is the highest growth rate since 2015-16 and FBR has made great efforts to attain this growth despite rather subdued economic activity.
The original target of 2367 b was revised to 2197 in view of import compression in first quarter. The trend has continued for the second quarter. This compression of over 5 billion dollars has on one hand improved Current Account situation but on the other hand has adversely effected the usual revenue resources of the government.
An estimated loss of 56 billion of taxes is incurred on every billion dollar of import compression. FBR has redoubled its efforts on domestic side and has managed to shift its tax dependence on import taxes from 56% to a little above 40% this year. With expected upturn of economic activity in last six months and a likely stabilisation of imports, it is expected that FBR is going to collect an unprecedented amont of taxes this year without disrupting and distorting economic activity.
