Islamabad, Sep 20: A plan to help the Federal Board of Revenue (FBR) collect up to Rs. 4 trillion in tax revenue during the fiscal year 2024–25 was posted on LinkedIn by the Overseas Investors Chamber of Commerce and Industry (OICCI) on Friday.
Globally, tax rates pose a major problem to business owners; Pakistan too has comparable challenges in terms of investment and tax income. Investors are discouraged by the economy’s informality, the way taxes are administered, and the high tax rates.
The country’s withholding tax regime, which has over 200 classifications, is excessively complex, according to OICCI analysis. This is because there are multiple sections and different rates for active and non-active taxpayers. Furthermore, even though less than half of the sections generate 94 percent of the revenue, the number of classifications is still high.
To increase revenue and widen Pakistan’s tax net, the tax regime must be simplified. The OICCI suggests lowering tax return filing frequencies to facilitate compliance, standardizing sales tax rates across all jurisdictions and industries, and instituting a single sales tax return for all industries (much like the telecom industry).
Furthermore, in order to identify potential taxpayers and solve income disparities, digitization and improving the FBR’s research capacities are essential. By doing so, it may be possible to release between Rs. 3 and 4 trillion in tax revenue for FY25.
