RECORDER REPORT

PESHAWAR: The Khyber Pakhtunkhwa Revenue Authority (KPRA) has generated a total revenue of Rs 35 billion from its inception to till June 30, 2017, said Annual 2016-17 Report of the authority.

The authority as corporate entity was established under the Khyber Pakhtunkhwa Finance Act, 2013, with the mandate to administer and collect Sales Tax on Services. The KPRA is governed, with relative autonomy, and placed under the Excise & Taxation Department to have an interface with the provincial government.

Initially eleven (11) service sectors were included in Schedule-II of the Khyber Pakhtunkhwa Finance Act 2013 and during the period from 2013-14 to 2016-17, the tax base has been broadened by adding more sectors. The total taxable sectors in the year 2017-18 reached to ninety one (91).

On August 6, 2013, the authority started its journey by registering seven (07) persons which number raise to three hundred and eight (308) at the end of June, 2014 and by December 2017, 1160 registered taxpayers have regularly filed their monthly returns.

In the first year, the authority was able to collect Rs 6.02 billion against the target of Rs 6.00 billion. During the next financial year i.e. 2014-15 the target was raised to Rs.12 billion (100% increase) without any empirical evidence and altogether ignoring the capacity of the nascent organization. Resultantly, the nascent organization managed only collected Rs 6.2 billion. Again, in the financial year 2015-16, a target of Rs.14 billion was fixed. However, the target was revised to Rs.8.00 billion against which a total collection of Rs.7.2 billion could be managed.

For the year 2016-17, the provincial government set the target of Rs.10 billion, which represented an increase of 25% over the previous year’s target and the authority succeeded in collecting revenue of Rs.10.27billion, which also include Rs.1.4billion as recovery from a court case.

According to the comparison made in the report, in the pre-2013, Federal Board of Revenue (FBR) collected taxes on services and distributed among the provinces accordingly. Post 2013, the tax collection on services has experienced a steady growth as the KPRA collected Rs.29.5billion in just four years, in comparison with overall tax collection of Rs.22.8 billion made by FBR during twelve (12) years i.e. 2001 to 2013.

A Council with Chief Minister Khyber Pakhtunkhwa and comprising of three cabinet members including minister for finance, law and excise & taxation, the Chief Secretary, Secretaries of the finance, law and excise & taxation departments and four representatives nominated by the government from the private sector as policy making body of the authority.

The publishing of the annual report of the authority is mandatory under Article 103 of the Act ibid, which is to be compiled annually and presented to the provincial assembly. However, the authority so far since 2013 has published its first report.

The document details the broad overview of the KPRA in terms of its structure, functions, targets, performance and achievements for FY 2016-17 and first half of 2017-18.

The executive summary of the report says that the tax system in Khyber Pakhtunkhwa reflects narrow base and fragmented revenue administrations through various departments namely Revenue & Estate and Excise & Taxation etc. The KPRA has emerged as the largest tax collection authority of the province contributing, 31.63% to the total Provincial Own Receipts and 56.42% to the total Provincial Tax Receipts for the year, 2016-17. The authority was envisioned to enhance fiscal space for social development in the province.

The authority has faced several challenges since its beginning including frequent changes in the top management. Nevertheless, it has generated significant revenue through expanding the tax base for services, informed compliance and introducing automated systems and processes. However, the delayed operationalization negatively impacted the desired goals of tapping of the potential revenue. Notwithstanding, the year 2017 proved to be productive in terms of not only achieving the revenue targets set by the provincial government; but also progressed on institutional development in the true spirit.

The authority has succeeded to frame necessary byelaws under the Finance Act 2013, devised organizational structure aligned with strategic goals and objectives.

The KPRA has also developed various strategies including a comprehensive communication strategy for enhanced emphasis on informed compliance. The transition team of the authority successfully managed the technical assistance of multiple development partners in governance reforms.