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March 27, 2020

FBR mulls easing collection targets amid lockdown

Business

March 27, 2020

KARACHI: The Federal Board of Revenue (FBR) is expected to revise down the collection targets assigned to its field offices following lockdown in many parts of the country amid coronavirus outbreak, sources said on Thursday.

The sources said the FBR asked field offices to provide their capacity of revenue collection during the month of March 2020 and in the remaining period of the current fiscal year.

They said the FBR was endeavoring to achieve 70 percent growth in revenue collection during the current month compared with the collection of March last year. The FBR collected Rs371 billion in March 2019 so the collection target for this month might be around Rs630 billion.

The sources said many FBR’s field offices believed that the collection growth might be a little over 10 percent during the ongoing month. Some tax offices are not optimistic that the FBR even match the collection level of March 2019.

An official at the Large Taxpayers Units Karachi said the sales tax collection on import stage started crumbling since March 23, 2020. The government initially tasked the FBR to collect Rs5.550 trillion for the current fiscal year of 2019/20. However, the FBR was already witnessing shortfall prior to coronavirus. The tax collection target was revised downward to Rs5.238 trillion. The developing situation is showing the FBR might not able to post a sizeable collection growth during the current fiscal year.

The tax official said the FBR is estimating further tax losses during the current fiscal year due to lockdown. The provisional collection of the FBR during July-February 2019/20 was Rs2.714 trillion. The tax collection by the end of third quarter as per a loan agreement with the International Monetary Fund (IMF) should be around Rs3.520 trillion.

Last year, IMF agreed to lend $6 billion to Pakistan, introducing structural reforms to help the country come on a sustainable growth path. In order to plug huge gap in revenue collection, the FBR at the start of the current month was assigned the higher collection target.

In order to achieve the target, the FBR assigned different percentage of growth to the tax offices. The sources said some offices were tasked to double their collections.

The sources said cases of coronavirus were detected in late February and they increased more sharply during the ongoing month.

All the four provincial administrations have resorted to lockdown to prevent the spread of coronavirus. However, this situation massively reduced the consumption of several revenue spinners, especially the petroleum products.

The sources said the industrial production activities are partially suspended and the airline industry is shutdown.