Pakistan, ADB agree to put at least Rs255bn in TSA to unlock $300m loan

ISLAMABAD: In order to obtain a $300 million loan from the Asian Development Bank (ADB), Pakistan has agreed to slash down tax compliance gap by 6 percent and bring at least Rs255 billion into single treasury account (TSA) out of the total estimated amount of $9 billion lying into accounts of commercial banks.

The government has sought concept approval for the Domestic Resource Mobilization (DRM) program loan of ADB from the Planning Commission’s Central Development Working Party (CDWP) meeting held here on Thursday.

There is another co-financing of $100 million from EXIM/AIIB, which will add up the total DRM financing to $400 million for the cash starved country.

According to the concept paper, the program outcome indicators include overall tax compliance gap reduced to at least 20 percent of potential collectable tax under current regime, consolidation of Rs255.1 billion in the treasury single account (TSA)-II and fiscal deficit-to-GDP ratio to 3.5 percent for promoting fiscal sustainability.

In order to improve taxpayer integrity and compliance, the Federal Board of Revenue (FBR) approved the Inland Revenue (IR) Strategic Reform Plan (SRP) 2021-2025, which addresses the weaknesses identified in the Tax Administration Diagnostic Assessment Tool (TADAT) 2021.

The FBR established the legal framework to implement SWAPS through National Assembly’s approval of the Income Tax Ordinance 2001 (Amendment) and established the Directorate General of Digital Invoicing and Analysis. Besides, it also developed and approved specifications for an integrated application programming interface (API) that will enable synchronized withholding tax transactions and digital payments to multiple stakeholders in real time.