ByThe corporate sector emerged as a significant contributor to Pakistan’s tax revenue during the fiscal year 2023-24, with a contribution of Rs 3,061 billion as income tax, as highlighted in the Federal Board of Revenue’s (FBR) latest report. This substantial figure underscores the pivotal role of the corporate sector in supporting the nation’s fiscal framework.
The breakdown of tax receipts reflects the diverse sources of revenue generation. Corporate tax receipts dominated, followed by Rs 1,119 billion collected from individual taxpayers and Rs 353 billion from associations of persons (AOPs). This distribution showcases the FBR’s progress in fostering a balanced approach to tax compliance and contributions.
The report further elaborates on the overall revenue performance, with direct taxes leading the way by surpassing revised targets. Income tax collections achieved 121.2% of the target, while capital value tax (CVT) excelled with an impressive 125.2% of its target. Notably, the Workers Welfare Fund (WWF) and Workers’ Profit Participation Fund (WPPF) collections significantly outperformed expectations, reaching 196.8% of the target. These achievements highlight the FBR’s effectiveness in tapping into diverse revenue streams.
However, some areas showed a marginal shortfall in achieving their respective targets. Sales tax collections reached 85.6% of the target, while Customs collections stood at 83.4%. Despite these gaps, their contributions to the overall revenue pool remained substantial. The Federal Excise Duty (FED) collections exhibited resilience, achieving 96.2% of the target, reflecting stability amidst economic challenges.
A noteworthy aspect of Customs Duty collections during the year was the inclusion of Rs 21.3 billion levied as Export Development Surcharge (EDS), under Section 11 of the Finance Act 1991, and later amendments. Initially reconciled by FBR with the Accountant General of Pakistan Revenue (AGPR) under the account head B-02203, the EDS underwent a significant procedural shift due to amendments introduced via the Finance Act 2022. The amendment redefined the Export Development Fund (EDF) structure, mandating the direct transfer of EDS receipts by the State Bank of Pakistan (SBP) to the EDF account.
This procedural change has led to discrepancies in the reconciliation of figures between the FBR and AGPR. The matter, as detailed in the FBR report, remains under correspondence following directives from the Finance Division issued in early 2024. Resolving this ambiguity is crucial to ensuring transparency and coherence in revenue accounting.
The FBR’s overall performance for the fiscal year reflects its robust efforts to diversify revenue streams and enhance fiscal sustainability. By exceeding targets in key areas and addressing challenges in others, the FBR demonstrated its commitment to fostering economic growth and strengthening the country’s financial stability. The corporate sector’s contribution remains a cornerstone of this effort, emphasizing its critical role in the national economy.
