With a historic deficit looming,
what can the FBR do?
The economic slowdown might send FBR searching for new avenues of tax collection. Does it mean bad news for existing taxpayers? By Ahtasam Ahmad & Shehzad Pracha
P
rime Minister Shehbaz Sharif is staring down the throat of a tiger. His newly cobbled together coalition government might be swallowed up by any one of the many crises that it has inherited. Not only is the country facing massive inflation and an energy crisis unlike any other witnessed in recent times, the new government will also need nerves of steel when they present the budget for the next fiscal year in only a couple
TAXATION
of months. In the budget, Pakistan is facing a historic deficit. The balance of payments is completely out of whack, the import bill is soaring because of global fuel prices, and some tough calls need to be made. In the wake of all of these rising expenditures, the Federal Board of Revenue (FBR) is under scrutiny. Can they beef up tax collection by netting some big fish? In the last few weeks, the board has initiated recovery of tax liability against multiple companies including those in the Telecom, Fertilizer and Cement sector. On the receiving end of the FBR’s attempt to meet collection targets
were companies like Zong, Telenor, Jazz and operators in the cement & fertilizer sector as well as the National Highway Authority. The income tax disputes in these cases are based on multiple underlying factors ranging from disallowance of various expenses to differences in interpretation of certain sections of the law. It is not a coincidence that the tax regulator is on a recovery spree at this particular time. The expected economic slowdown leading to curbing imports as well as the tax relief provided on multiple commodities, most notably petroleum products, has made the collection of targeted 6.1 trillion rupees in taxes
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