Tax on export income up 19 percent in July-February on rupee rout

KARACHI: Tax authorities have benefited from sharp depreciation in rupee against the US dollar in recent months as income tax collection on traders’ export proceeds had jumped 19 percent in July–February period of the current fiscal year, officials said on Tuesday.

The Federal Board of Revenue (FBR) has collected Rs21 billion from exports during July–February 2018/2019 as compared to Rs17.6 billion in the corresponding period of the last fiscal year.

Officials said the exports in terms of dollar have not exhibited a tangible growth but the rupee depreciation helped the revenue authorities to collect more taxes.

The exports of the country registered 1.85 percent growth to $15.11 billion during July– February 2018/2019 against $14.83 billion in the same period last fiscal.

However, in rupee terms the exports value posted 25.3 percent growth to Rs1,991 billion during the period under review compared to Rs1,589 billion in the same period of the previous fiscal.

The local currency depreciated 14.4 percent against the US dollar during first eight months of current fiscal year.

According to weighted average value the exchange rate on July 01, 2018 was at Rs121.55 to the dollar and it increased to Rs139.05 to the dollar on February 28, 2019.

The FBR collects tax at one percent on the export receipts realised by banking companies or exports processed.

However, this rate of tax is 5 percent when the export proceeds are realised through exchange companies.

Sources said the collection of tax under this head was final tax for exporters.

The tax collection from export proceeds is a major revenue spinner for the FBR.

The revenue body collected Rs28.27 billion during fiscal year 2017/2018, which was 16.6 percent higher than Rs24.25 billion collected in the preceding fiscal.

The sources further said the collection from export proceeds also increased due to strict monitoring on transactions through banking channels and at the customs clearance stage.

They added that the introduction of Electronic Export Form (EEF) by State Bank of Pakistan (SBP) and Pakistan also helped get true declarations out of the exporters.

The sources said the tax collection on export receipts through banking increased 20.8 percent to Rs19.37 billion during first eight months of current fiscal year as compared to Rs16.04 billion in the same period of the last fiscal.

While the collection from indenters’ commission processed by exchange companies increased 5.6 percent to Rs687 million compared to Rs650.62 million previously.