Pakistan’s Federal Board of Revenue (FBR) is nearing its nine-month tax collection target of Rs6.7 trillion after attaching bank accounts of the Civil Aviation Authority (CAA) to recover Rs13 billion in owed taxes.
Reaching the Target
With only Rs41 billion remaining to meet the goal, FBR Chairman Malik Amjad Zubair Tiwana expressed confidence in achieving the target. He expects an additional Rs34 billion in tax collection over the weekend.
CAA Tax Exemption Dispute
The tax recovery from CAA stems from a dispute over income tax exemptions claimed by the authority based on two new parliamentary enactments. The FBR argues that these exemptions are not valid because they contradict the Income Tax Ordinance, the main tax law.
Tax Exemptions and IMF Concerns
This incident highlights concerns raised earlier about Pakistan granting Rs50 billion in annual income tax exemptions to CAA and the Pakistan Airports Authority (PAA). These exemptions reportedly violate the International Monetary Fund (IMF) program and Pakistan’s own tax laws.
FBR’s Commitment to IMF Agreement
The FBR emphasizes its adherence to the IMF agreement by stating that the Income Tax Ordinance is the sole legal authority for tax exemptions. This contradicts the tax exemptions granted through the Pakistan Civil Aviation Act and the Pakistan Airport Authority Act.
Tax Collection Performance
Despite missing the monthly target of Rs879 billion for March by Rs44 billion, the FBR’s overall performance shows improvement. Tax collection for the nine-month period (July-March) stands at Rs6.67 trillion, reflecting a 29% increase compared to the same period last year. The FBR also issued significantly higher tax refunds this year, totaling Rs369 billion in nine months, compared to Rs251 billion in the previous year.
Looking Ahead
The FBR remains confident in achieving its annual target of Rs9.415 trillion despite a slowdown in imports. The next two days’ tax collection is expected to push the growth rate above 30%.
