- Web Desk
- Jan 29, 2024
Caretaker govt commits Rs108 billion new taxes with IMF
ISLAMABAD: The caretaker government has committed with the International Monetary Fund (IMF) that it will impose b Rs108 billion new taxes during the remaining period of current fiscal year if case of revenue shortfall happen.
The Memorandum of Economic and Financial Policies issued by IMF states that Pakistan has committed with the Fund to monitor the performance of the Federal Excise Duty (FED), income tax, including the advance payments and the withholding taxes, and the expansion in the taxpayer base, providing the IMF team with timely monthly data on agreed performance indicators early in the following month.
Should revenue fall short, the government will adopt appropriate corrective measures including raising the GST rate for textiles and leathers tier-1 from its reduced rate of 15 per cent to the standard rate of 18 percent, expected collection of Rs1 billion per month.
In addition, it also agreed to implement a Federal Excise Duty (FED) of Rs5 per kilogram on sugar and FBR will collect Rs 8 billion per month.
The other measures included increase advance income tax on import of machinery by 1 percentage point, expected collection of R 2 billion per month; increase advance income tax on import of raw materials by industrial undertakings by 0.5 percentage points, expected collection of Rs2 billion per month; increase advance income tax on import of raw materials by commercial importers by 1 percentage point, expected collection of Rs1 billion per month; increase withholding tax on supplies by 1 percentage, expected collection of Rs1 billion per month; increase withholding tax on services by 1 percentage point, expected collection of Rs1.5 billion per month and increase withholding tax on contracts by 1 percentage point, expected collection of Rs 1.5 billion per month.
In January 2024, we plan to launch a scheme for door-to-door campaigns in four provincial capitals and Islamabad, to register non-filing retailers and streamline their tax filing.
By cross-referencing tax filings with electricity meter data, we will detect evasion and conduct audits when required. We will implement safeguards in the form of strict supervision through random audits of assessments filed under the scheme to verify correctness of valuations and payments.
We will launch this scheme with least discretion for the field offices to alter valuations and assessments to protect the potential revenue raised from these actions.
To avoid double taxation, monthly advance tax payments under the scheme will offset final income tax liabilities at year-end at the time of return filing, but no refunds of such advance payments of taxes will be issued. Moreover, we commit to provide the IMF team with timely monthly data on agreed performance indicators.