IMF Lowers Tax Collection Targets for FBR-Pakistan amid Covid-19

IMF Lowers Tax Collection Targets for FBR

The International Monetary Fund (IMF) has updated the Federal Revenue Board’s (FBR) tax collection forecast for the current fiscal year from Rs 4.8 trillion pre-COVID-19 to Rs 3.908 trillion post-COVID-19, representing a decrease of Rs 0.892 trillion.

That was revealed in an IMF staff study under the Rapid Financing Instrument (RFI). The FBR’s tax collection is expected to decrease as a percentage of GDP from 10.9% to 9.3% in 2019-20 with direct tax collection forecast revised downwards from Rs. 1.9 trillion to Rs. 1.6 trillion in 2019-20, sales tax from Rs. 1.852 trillion to Rs. 1.427 trillion in 2019-20, customs duty from Rs. 697 billion to Rs. 546 billion, federal excise duty from Rs. 329 b

The IMF staff report shows that the proposed fiscal stimulus package, worth 1.2 percent of GDP, includes:

  1. Supporting poor families by extending existing services and higher disbursements.
  2. Supporting daily wage earners by setting up an Rs. 200 billion funds for the workers most affected by it.
  3. Strengthening the network of corporate convenience stores and resources to improve food security.
  4. Temporary price cuts to ensure important goods remain affordable.
  5. Provision of quality healthcare by reducing taxes on critical equipment and hospital machinery.
  6. Help to the export sector by removing the GST tax refund backlog, which will provide immediate relief in cash flow.
  7. Reduced oil prices.
  8. Relief on energy and gas bills by providing installment payment plans.
  9. Boost support for the procurement of additional equipment and operations for the National Disaster Management Authority of Pakistan, the main focal agency to fight COVID-19.
  10. Creating an Event Fund. Moreover, the authorities have launched a program for the construction sector to address the acute job needs created by the lockout, which includes a special tax scheme and no wealth declaration for projects launched within a short window until the end of 2020.
Muhammad Salman Siddique
Researcher and Content Writer at e-Syndicate Network. A constant learner. Learning and growing every day. Salman has over 5 years of experience in the fields of Digital Marketing, Content Writing, Brand and Business Development.