FBR may suggest one-time taxation
ISLAMABAD: The Federal Board of Revenue (FBR) is planning to propose a one-time tax on sectors earning high profits in the budget 2020-21. The board is also working on several other proposals to generate additional revenue to the tune of Rs500-600 billion in the next fiscal year through taxation measures, documentation and effective monitoring, enforcement and administrative measures.
Sources told Business Recorder that the FBR was facing serious issues in generating additional revenues due to slowdown of economy and lockdown following post COVID-19 scenario.
The sharp decline in petroleum products prices is also having a negative impact on sales tax collection of the FBR.
There is a possibility of one-time taxation on sectors showing sizeable profits in current economic situation.
The budget makers are also examining that whether any kind of one-time land tax is possible or not, the sources said.
According to the sources, the government is expected to set the FBR’s revenue collection target within the range of Rs5,000 billion to Rs5,103 billion for the next budget against the revised target of Rs3,908 billion for 2019-20, reflecting a growth of around 31 percent.
The International Monetary Fund has also projected Rs5.101 trillion tax collection target of the FBR for 2020-21 against pre-Covid19 projection of Rs6.138 trillion for the next fiscal year.
If revenue collection is estimated at around Rs4,500 billion for 2020-21 keeping in view factors of growth in revenue collection, inflation, GDP growth and revenue base, the collection of remaining amount between Rs500 billion to Rs600 billion will be the biggest challenge for the FBR in the next fiscal year.
Sources said that the government was also considering expanding sales tax in the shape of value added tax (VAT) mode within the whole supply of value chain.
The manufacturers, wholesalers and now retailers at all levels must come into the tax net. Moreover, there is scope for conducting risk-based audits, which can identify very specific areas where there is a large tax gap. The FBR’s investigations against transfer pricing and audits of multinational companies can be instrumental in generating additional revenue in 2020-21.—SOHAIL SARFRAZ