Federal Cabinet approved documentation of economy plan with a clear target to enhance tax-to-GDP ratio from existing 8.5 to 18 percent of GDP by 2029

ISLAMABAD, Jan 31 (SABAH): Federal Cabinet has approved Documentation of Economy Plan with a clear target to enhance tax-to-GDP ratio from existing 8.5 percent to 18 percent of GDP by 2029.

Prime Minister Anwar Al-Haq Kakar, in the chair the other day, was informed in detailed about the intiatives and targets to be achieved under the proposed plan.    

Pakistan’s tax-to-GDP ratio has been declining, with FBR tax/GDP ratio barely 8.5% in 2022/23, while country’s tax capacity has remained largely around 22% of GDP including the taxes under purview of provinces that yield barely one percent of GDP revenues.0

The number of taxpayers in Pakistan is barely 2.3 million.  Corporate tax filers are 0.8% of commercial and industrial electricity users and GST registered entities are barely 13% of the 1.4 million taxpayers. Going forward, the Tax Administration will be driven by advanced technology, utilizing Big Data, leveraging data analytics and Artificial Intelligence guided systems.

The blueprint for the digital transformation of the Tax authority has been prepared, which has the following main components: The Documentation has already been introduced making it mandatory for organizations, both public and private to share data about assets, transactions and income with the FBR through a digital platform. 

Digital Invoicing to capture Sales and purchase transactions across the entire supply chain, which is mostly undocumented right now. Leveraging the technological prowess of NADRA and bringing in Karandaaz and support of Bill Melinda and Gates Foundation to help digitize tax collection. 

A new system Synchronized Withholding Administration and Payment System – SWAPS, which will link the payer, Payee, bank and FB through the SWAPS Portal. A new & simplified scheme for untaxed sectors has also been devised based on a technology platform.