Pakistan assures IMF to add 0.3m more people to tax net – Latest News – The Nation

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The government will broaden the base of the IRP with data on corporate withholding tax.

ISLAMABAD – Pakistan has assured the International Monetary Fund (IMF) that it has brought an additional 0.3 million people into the tax net and passed a new law to improve the performance of state-owned enterprises.

“We will pursue a substantial expansion of the PIT (personal income tax) base by an additional 300,000 people, through the use of business withholding data and identify for registration of new people as well as the use of third-party data. If necessary, we will also conduct physical surveys to book new people,” the government said in documents sent to the IMF for the seventh and eighth reviews under the extended agreement.

Pakistan has also assured the IMF for the improvement of its revenue administration. “As of the end of June 2022, we have accrued Rs 366 billion in income tax refund arrears, an increase of 67% in the year due to backlog in processing tax claims. repayment. We will clear income tax arrears until the stock is reduced to Rs 225 billion, thus reversing the accumulation of arrears during this financial year, and this will be completed by the end of September 2022 . »

The government has stated that it is committed to limiting any future recurrence of these arrears and to improving tax administration to increase the efficiency of revenue collection and that it will redouble its efforts to: (1 ) simplify the declaration of income and develop electronic services for taxpayers; (2) expedite the resolution of refunds and administrative appeals; and (3) strengthen the large taxpayers office. The priorities of the tax administration are: (1) to develop a comprehensive compliance strategy and establish a central risk management unit and a compliance risk management committee at the central level; (2) systematic identification and assessment of compliance risks; (3) adopting a more project-based approach to address specific high-risk tax compliance areas; and (4) strengthen data collection and analysis. To support GST harmonization, the government introduced a single filing portal in December 2021, which removes the need to file separately with five different tax administrations and simplifies administration with a single tax base, which will greatly improve the ease of doing business and build trust. taxpayers.

NEW LAW FOR SOES:

The government also informed the Fund that the National Assembly passed its new law on public enterprises in July 2022, which is now awaiting Senate approval. “In line with staff recommendations and among others, it will: (1) ensure that SOE operations are commercially based, including defining what constitutes a commercial SOE; and (2) regulate the terms of supervision and ownership”. Meanwhile, the government said it was working with AfDB support to finalize further regulatory reforms by end-December 2022, including seeking cabinet adoption of a public enterprise ownership policy. This will help operationalize the principles of the State Enterprises Act (once enacted) into a policy that clarifies ownership arrangements and the distribution of roles within the federal government; and Amendment of acts relating to public enterprises.

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