ISLAMABAD: Prime Minister Shehbaz Sharif has said that increasing the tax base and reducing the burden on the poor are top government priorities.
Chairing a meeting to review progress on reforms in the Federal Board of Revenue (FBR) here on Monday, the prime minister welcomed the simplification of tax returns and their availability in Urdu, and directed to establish a helpline aimed at assisting the filing process.
He said that tax reforms should focus on facilitating the common citizen. He also instructed to launch a digital invoicing in Urdu and noted that tax returns have been made digital and concise, and linked with a central database for public convenience.
He also observed that the salaried class would benefit the most from the new simplified tax returns and on the occasion advised the officials to run a public awareness campaign to encourage more people to file returns under the new system. He emphasised a third-party validation to ensure transparency in all FBR reforms and acknowledged that the positive outcomes of tax reforms are the result of tireless efforts by the finance minister, economic team, FBR chairman and their staff.
He noted that for the first time in country’s history, implementation of AI-based tax assessment system is a major success for which FBR’s efforts are commendable. The prime minister directed to provide special facilities to small and medium-sized businesses to join the digital invoicing system.
The meeting was briefed on progress regarding digital invoicing, e-Bilty, simplified tax returns, AI-based assessment system, central Command and Control Centre and the cargo tracking system.
It was shared that FBR’s Command and Control Unit would be operational by September this year, enabling centralised data access and facilitating more efficient decision-making. The meeting was also updated on the AI-driven assessment system. Traders will now be able to submit advance goods declarations prior to the arrival of ships, with full exemption from upfront duties and taxes.
It would also help to increase advance declarations from three percent to over 95 percent, allowing containers to be transported directly from ships to factories.
Regarding the digital invoicing system, it was noted that all small and large businesses would issue receipts through FBR’s online platform at the point of sale and purchase. Approximately 20,000 businesses are expected to be integrated into the system in the coming months. It was also informed that within just one month, 8,000 invoices worth Rs11.6 billion were issued. The system includes a taxpayer portal and a monitoring dashboard.
Integration with PRAL is free of cost, and traders’ training is being actively facilitated. Once fully implemented, traders would no longer need to file separate sales tax returns, as transactions would be automatically recorded in the system.
The meeting was also informed that the system would eliminate fake and flying invoices by aligning with internationally recognised 8-digit HS codes, simplifying performance evaluation of the sales tax system. Training sessions have also been conducted to prepare business owners for the transition.
The meeting was also apprised that simplified digital tax returns for salaried individuals would be available from Tuesday, with access for other taxpayers beginning by 30th of this month.
With regard to the cargo tracking and e-Bilty system, real-time monitoring of goods movement and tax payments would be integrated, while AI-based assessments would enhance tax enforcement.
It was further told that Türkiye is supporting Pakistan in deploying this system to meet international standards. Meanwhile, the prime minister expressed satisfaction over Pakistan Stock Exchange crossing record 135,000 points.
In a statement, he said the historic surge of stock market is a reflection of the business community’s confidence in the Pakistani economy. He said recent positive economic indicators are a testament to the correct direction of the government’s policies.
The prime minister said that providing a business-friendly environment in the country is our top priority. He said Pakistan is now on the path to economic growth after achieving economic stability.
He said the government is working tirelessly for the development and the welfare of the people. Meanwhile, Federal Finance Minister Muhammad Aurangzeb announced to reach out to all business chambers and associations regarding the strike on July 19 against what business community called anti-business finance act.
“Negotiations will be held with representatives of all chambers of commerce on Tuesday (today) to place out point of view,” he announced while speaking to the media after a meeting with members of multinational companies at the Overseas Investors Chamber of Commerce and Industry (OICCI) in Karachi.
The finance minister said that before calling the July 19 strike, all chambers should have got information about Sections 37A and 37B of the law. He stated that the current law includes strong safeguards against sales tax fraud and other violations. For irregularities involving more than Rs50 million, arrest would only be possible with the permission of a commissioner or a three-member FBR board.
He clarified that the powers of the FBR have no connection with income tax. A key meeting will be held on Tuesday (today) with chamber presidents regarding FBR’s enhanced powers, and they would be briefed accordingly. The additional powers of the FBR would apply only in cases of sales tax fraud exceeding 50 million rupees, he said.
He said that propaganda is being spread against these enhanced powers. These powers were passed by the assembly after consultation with the standing committee and were introduced specifically to prevent sales tax fraud.
The finance minister also shared that a meeting was held Monday morning with the governor of the State Bank and heads of commercial banks to discuss the role of banks in Pakistan’s sustainable economic growth. He said Pakistan’s financial outlook has improved, increasing banks’ liquidity, and therefore, lending to the private sector should now increase. He noted that financing to agriculture and SMEs has improved.
“We are seeing initial signs of economic recovery, but to avoid recurring instability, Pakistan will have to make bold and sometimes difficult decisions. The government wants to provide a transparent, stable and investment-friendly environment for the business community,” he said.
He said that a list of 24 state-owned enterprises has been handed over to the Privatisation Commission. Banks can play a key role, especially in the privatisation of PIA. For the revival of sick industries, banks should work with sponsors, and joint efforts should be made for the recovery of loss-making public institutions. He emphasised that Pakistan’s banking sector continues to support the national economy.
The latest OICCI survey, he said, reflects economic stability. He noted the need to move forward by uniting local and foreign investors. So far, $2.3 billion has been paid to multinational companies in the form of profit repatriation. The problems of foreign investors taking profits out and LCs not being opened have been resolved.
Senior leadership of OICCI has been invited to Islamabad to meet the prime minister. Issues related to refunds of multinational companies will soon be resolved. In the current month, sales tax refunds worth Rs75 billion have been issued.
He also said that the loss reports of public sector institutions have been made public, and the private sector has been invited to invest in them. In response to a question, the finance minister said that Economic Coordination Committee (ECC) is monitoring food prices on a monthly basis. He stressed that a deregulation formula must be adopted as part of a structural solution, which is why there are no issues with the prices of corn, rice and pulses.
He appreciated the volume of remittances and said national indicators would further improve in coming days. The finance minister added that the government has provided as much relief as the fiscal space allowed for salaried individuals. A simple tax return form has been developed for the salaried class and made available on the FBR website. Later, small traders and SMEs will also be included.
To a question the finance minister said: “Which finance minister wouldn’t want rapid growth? But then foreign exchange reserves would come under pressure and fall to critically low levels. In my opinion, there is room to cut interest rates, but the final decision rests with the State Bank.”
