Business

Dar directs FBR to take steps for achieving tax collection target

Published

2 years ago

Farwa

Dar directs FBR to increase its efforts to achieve true tax potential.
FBR faces a revenue shortfall of Rs225 billion for December 2022.
Revenue shortfall will now make it hard for government to convince IMF to revive its stalled programme.

Finance Minister Ishaq Dar has directed the Federal Board of Revenue (FBR) to make all possible efforts to achieve the true tax potential in the country as the body has missed the target for the outgoing month of December 2022.

The finance minister made the remarks while chairing a meeting on the revenue performance of FBR in Islamabad.

During the meeting, FBR Chairman Asim Ahmad gave a detailed presentation on revenue targets and performance of FBR for the months of November and December 2022.

It is pertinent to mention here that FBR faces a revenue shortfall of Rs225 billion for the outgoing month of December 2022; the tax collection machinery collected only Rs740 billion against the desired target of Rs965 billion.

This increased revenue shortfall will now make it hard for the government to convince the IMF to revive the stalled IMF programme without taking additional and substantial taxation measures such as a mini-budget for the current fiscal year.

The government is contemplating options for the imposition of Flood Levy in the range of 1% to 3% to fetch Rs60 billion. Other taxation measures towards direct taxation are also on the cards. But the government is in a catch-22 situation and has identified only those areas that earned lofty profits because across-the-board taxation during the time of prevalent stagflation might further erode already sluggish economic activities.

However, the FBR sources argued that the imports compression and lingering litigation in higher judiciary resulted in lowering the revenue collection target. They have conveyed to the IMF that the collection of pending revenue would be materialised till March 2023. So, the FBR’s annual target of Rs7.47 trillion would remain intact, they believe.

But independent analysts are of the view that it would be hard for the FBR to achieve the desired tax collection target of Rs7 trillion by the end of June 30, 2023. The FBR has so far collected Rs3.428 trillion in the first half (July-Dec) period of the current fiscal year against the desired target of Rs3.673 trillion. The FBR collected Rs2.9 trillion in the same period (July-Dec) of the last financial year 2021-22.

According to the official statement, the FBR has demonstrated a remarkable revenue collection performance in the first six months of the current financial year 2022-23 and has collected Rs3,428 billion for the first six months against Rs2,929 billion collected in the corresponding period of last year depicting an increase of 17%.

The FBR collected Rs740 billion for the month of December 2022 against Rs599 billion in the same month last year, showing an impressive growth of almost 24% compared to the same month last year. This performance is despite huge import compression and zero rating on petroleum.

Direct taxes collection continues to grow at a robust pace, which has shown a growth of 66% during December 2022 compared to December 2021, a clear indicator of the policy of shifting the tax burden on the wealthy and affluent. Direct taxes collection for the first six months has also registered an unprecedented growth of 49%. This was achieved despite the fact that certain policy interventions having a revenue impact of Rs250 billion introduced through Finance Act 2022 could not be implemented as these are sub-judice in the courts. The target for the month of December was Rs965 billion, which could not be achieved due to the aforementioned reason.

The revenue collection performance is also exceptional when viewed in the context that the FBR has also issued refunds of Rs176 billion during the first half of the current financial year as against Rs149 billion during the corresponding period of last year.

Business

Finance Minister Meets With World Leaders at World Economic Forum in Davos

Published

55 seconds ago

Farwa

During his attendance at the World Economic Forum in Davos, Switzerland, Finance Minister Muhammad Aurangzeb has met with officials of organisations and leaders of many nations.
Bangladesh’s Chief Advisor, Muhammad Younas, met with Mohammad Aurangzeb.
On the fringes of the World Economic Forum’s Annual Meeting 2025 Opening Banquet, there was an informal meeting.
Additionally, the Finance Minister met with Anwar Ibrahim, the Prime Minister of Malaysia.
Both leaders discussed economic cooperation and bilateral ties.
Muhammad Aurangzeb also had a meeting with Dp World’s Rizwan Soomro and Yuvraj Narayan.
They talked about how to strengthen Pakistan’s logistics and infrastructure systems to support trade.
“The Pakistani government is committed to advancing joint projects and values partnerships in both business-to-business and business-to-government cooperation,” the finance minister added.

Business

China will establish a $250 million EV production facility in Pakistan.

Published

8 minutes ago

Farwa

As Islamabad looks to Beijing to work with it to establish industrial zones for the production of electronic vehicles, the media said Wednesday that China’s ADM Group would invest $250 million to establish an electric vehicle manufacturing unit in Pakistan.

With an even more ambitious target of 90 percent by 2040, the Pakistani government established the National Electric Vehicles Policy (NEVP) in 2019 with the goal of having 30 percent of all passenger cars and heavy-duty trucks be electric by 2030.

By 2030, the policy aimed to achieve 50% of new sales for two- and three-wheelers and buses, and by 2040, 90%.

As part of the Special Investment Facilitation Council’s efforts to draw in foreign investment, Radio Pakistan reported that the Chinese company ADM Group had announced an investment of $250 million to establish an EV manufacturing plant in Pakistan.

“The switch to EVs is anticipated to save billions of dollars by reducing the cost of fuel imports.”

More than 3,000 electric vehicle charging stations will be installed throughout Pakistan, a South Asian nation, as part of ADM Group’s $350 million investment in the EV industry last year.

Pakistan announced earlier this month that, as part of its ongoing energy sector reform aimed at increasing demand, it would reduce the power rate for operators of electric vehicle charging stations by 45 percent.

Additionally, financial programs for e-bikes and the conversion of gasoline-powered two- and three-wheeled vehicles are planned by the government.

On January 15, the government approved a lower tariff of 39.70 rupees ($0.14) per unit, which will take effect in a month. The previous tariff was 71.10 rupees.

The government anticipates that investors in the industry will see an internal rate of return of over 20 percent.

There are currently over 30 million two- and three-wheeled cars in Pakistan, and they use more than $5 billion worth of petroleum each year, according to a report that Power Ministry adviser Ammar Habib Khan provided to the government and that was covered by Reuters.

The paper estimates that the ministry will save around $165 million in gasoline import expenses each year by converting 1 million two-wheelers to electric motorcycles in a first phase, at an estimated net cost of 40,000 rupees per bike.

In September, BYD Pakistan, a joint venture between China’s BYD and the Pakistani automaker Mega Motors, informed Reuters that, in accordance with international goals, up to 50% of all vehicles purchased in Pakistan by 2030 will be electrified in some way.

Business

The government has introduced a comprehensive strategy to enhance industrial investment.

Published

15 minutes ago

Farwa

Authorities are poised to execute an ambitious investment promotion strategy through a collaborative initiative between the National Institute of Public Administration (NIPA) and the Pakistan Administrative Staff College, aiming for substantial enhancements in industrial investment and economic development.

The Special Investment Facilitation Center (SIFC) will be instrumental in this transformative drive by establishing “Business Facilitation Centers” aimed at optimizing investment processes and attracting both domestic and foreign capital.

Principal features of the comprehensive plan encompass:

Forming collaborative working groups to augment domestic and international investment prospects
Formulating a comprehensive strategy to eradicate obstacles to industrial development
Formulating a novel model to tackle issues in the execution of industrial projects
Striving to enhance Pakistan’s international business rating by 50 points
Targeting $20 billion in foreign industrial investments within the next five years.

The approach prioritizes digital transformation to enhance the transparency and efficiency of the investment process. SIFC’s strategy emphasizes fostering a favorable atmosphere for investors by streamlining bureaucratic processes and offering strategic assistance.

National administration officers are conducting ongoing study to identify and mitigate potential investment barriers, while a specialized research group is formulating a comprehensive strategy to solve current hurdles in industrial growth.