Tarin targets 20% tax-to-GDP ratio for FBR

Top officials of the Federal Board of Revenue (FBR) were directed on Friday to adhere to an ambitious aim of reducing the tax-to-GDP ratio to 20 percent during the next six to eight years, according to Finance Minister Shaukat Tarin.

While at the same time, he expressed the expectation that the FBR team will exhaust all available resources and avenues in order to not only meet but also exceed the Rs5.8 trillion income target by a significant margin. So far, he noted, the FBR has been on course to meet its objective for this fiscal year, as evidenced by the fact that it has already exceeded it by a margin of Rs160 billion during the first two months of the current fiscal year.

Considering that the tax-to-GDP ratio was reported at 10.9 percent in the fiscal year 2020, the aim of raising the tax-to-GDP ratio is not only ambitious but also unattainable.

Mr. Tarin stated that the current government is focused on three areas: increasing the tax base, integrating large merchants with the tax system, and implementing a track-and-trace system for tax-sensitive industries. When speaking to senior FBR officials at the board’s headquarters, the finance minister said, “The expansion of the tax base is one of the top priorities of my team for the current year. We have formed committees comprised of private-sector experts, Nadra (National Database and Registration Authority), and FBR officers who are working tirelessly on this issue.”


He stated that these committees were also working on an assessment of FBR’s resource constraints, particularly in the areas of finances and logistics, and that they would make recommendations on how to overcome these constraints.

Another flagship program, according to the minister, is the integration of points of sales, which is aimed at capturing real-time transactions at the retail level. He added that it has a significant potential to boost revenue for the state. As a result of the high court’s decision to vacate the stay against the track and trace project, he stated that it would be implemented starting in November. He also announced that he had approved Rs432 million in funding for the project.

Mr. Tarin stated that a technical extra grant of Rs3.8 billion had already been awarded for the purpose of upgrading the tax administration’s information technology system and security. In his opinion, automating the tax system would increase openness while also reducing discretionary powers, which had been a long-standing demand of the business community.

Under the Pakistan Single Window concept, he explained, representatives from more than 70 different government ministries will come together on a single platform to assist the business sector, thereby promoting trade in the country.

According to the minister, the Federal Bureau of Revenue (FBR) has made great strides toward the harmonization of sales tax across the federation and federating units under the auspices of the National Tax Commission. He described the Integrated Transit Trade Management System as a “landmark project” that, once completed, will link the entire area, from Central Asia to South Asia, with a single network.

He stated that anti-smuggling and counter-smuggling measures were the greatest priority areas, and that the prime minister was extremely concerned about these initiatives. He commended the Federal Bureau of Investigation for its efforts to combat smuggling despite limited resources. The Vice President paid respect to the sacrifices made by customs officers who gave their lives in the course of their duties.

To reassure senior officials, the minister stated that the current administration was fully committed to granting the Federal Bureau of Investigation (FBR) operational and financial autonomy in order to eliminate the possibility of political interference and to transform the agency into an efficient, merit-based, customer service-oriented, and open to the public organization.

According to Ashfaq Ahmed, Chairman of the Federal Board of Revenue, the government’s top priority is to create an enabling environment for trade and business, particularly for small and medium-sized enterprises, through the simplification of laws and procedures, as well as to spur economic activity. In recognition of this goal, the Federal Reserve Board of Governors (FBR) has taken a number of tangible steps to bring it to fruition, according to the official.

Mr. Ashfaq reassured the finance minister that the FBR team was completely committed to achieving the revenue objective for the current fiscal year as well as the previous one. “We are on track and will leave no stone unturned in our pursuit of the historic milestone of Rs5.8 trillion,” he declared.

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