ISLAMABAD: The government is all set to table a draft legislation against benami transactions before a talk, scheduled in end January with the International Monetary Fund (IMF) on the tenth review under a bailout package of $6.7 billion, a senior official said on Wednesday.
The country’s officials will hold scheduled talks with the IMF mission in Dubai from Jan. 26 for completing the tenth review of the extended fund facility to get the next tranche worth $500 million.
“Pakistan will table the draft legislation against benami transactions into National Assembly within the next two weeks in a bid to improve tax compliance,” Special Advisor to PM on Revenues Haroon Akhtar Khan told The News.
Khan said the FBR prepared the draft law and forwarded it to the Ministry of Law through Finance Division for its vetting a few months back. “Now the stage is set for tabling it before the National Assembly very soon,” he said.
An IMF’s latest report said Pakistani authorities will prepare and submit draft legislation against “benami” transactions into the parliament, “in which assets are held by or transferred to a person, but have been provided for, or paid by, another person under structural benchmark.”
Pakistani authorities now require all the government suppliers to be on the current list of active income and general sales taxes payers to conduct business with government departments.
In addition, the Federal Board of Revenue (FBR) has started monitoring the penalties imposed by its field officers.
The FBR will streamline the online filing scheme, which will facilitate registration and filing of personal income tax returns by simplifying the return form and maintain the coverage of tax audits at 7.5 percent of the filed tax returns. The apex tax authority will also establish a policy research and analysis unit to improve its analytical capacity for fiscal policymaking.
The FBR is also strengthening its intelligence capacity to gather financial information, particularly about high net worth individuals, from multiple sources, including real estate transactions, motor vehicle procurement, survey of palatial houses and international travel.
The government will take additional measures to attain the budget deficit target of 4.3 percent of GDP, including an adjustor of 0.3 percent of GDP for critical one-off spending.
To bridge the projected fiscal gap, the government took additional revenue measures amounting to Rs40 billion by imposing regulatory duties and additional customs duties on a variety of products besides raising the excise duty on cigarettes.
FBR’s spokesman Dr Mohammad Iqbal said the FBR achieved its revenue target for end-December 2015, “so elimination of further tax exemption would now be taken in the coming budget for 2016-17 through the Finance Bill.”
The IMF report said Pakistan will reduce recurrent and capital spending by Rs15 billion each, “unless stronger federal revenue performance warrants otherwise.”
Pakistan has steadily raised the tax-to-GDP ratio, which now stands at 11 percent but it still remains low and authorities continue to see great scope to increase tax revenue by broadening the tax base, strengthening tax administration, and shifting the tax composition from indirect to direct taxes in an efficient and equitable way. “Our objective is to raise the tax-to-GDP ratio to 14.5 percent by FY2019/20,” said the IMF.
