Economic Survey Highlights Import Compression as Risk to FBR’s Tax Collection

The risks to the Federal Board of Revenue (FBR) revenue outlook are unprecedented import compression, a slowdown in economic activity, and litigation of important revenue measures in the High Courts and the Supreme Court. The Economic Survey (2022-23) released on Thursday revealed that the revenue mix of the FBR comprises 49 percent of the revenue coming from the import of goods. The import compression since the beginning of fiscal year 2022-23 (FY23), which aggravated in the third quarter and fourth quarters of FY23 is hurting the revenue stream. The Super Tax that was imposed in FY23 on high-earning persons has been challenged in the High Courts of Sindh, Punjab, and Islamabad. The decision of the Sindh High Court is pending in appeal before the Supreme Court of Pakistan and the High Courts of Punjab and Islamabad have yet to decide the issue. As interim relief to FBR, the Supreme Court has allowed 50 percent of the recovery of Super Tax. The devoted Broadening of the Tax Base (BTB) units have been established at Regional Tax Offices for the registration of new taxpayers based on information received. Field formation-wise targets have been assigned for FY23. The aim is to expand the tax base from the existing 1.2 million paid filers to 3.5 million paid filers by FY24. FBR registered 912,392 new taxpayers during the current year as of March 31, FY23, against the target of 700,000 new taxpayers, the survey highlighted.