Authority goes all out: FBR resorts to ‘arm-twisting’ to meet tax collection target
Tax authorities out to collect Rs140 billion in the remaining one week of the outgoing fiscal year; Banks are targets.
ISLAMABAD:
Tax authorities have hatched a plan to cover any possible shortfall in revenue collection by literally resorting to arm-twisting of banks, as the Federal Board of Revenue (FBR) faces a gigantic task of collecting Rs140 billion in the remaining one week of the outgoing fiscal year.
FBR has sent notices to various banks for not depositing withholding tax, which they collected on account of profit on debt and dividends. FBR has asked various banks to release Rs30 billion on account of short-filing, FBR Chairman Salman Siddique told The Express Tribune early this week.
Sources said that according to the plan, banks have been asked to deposit the amount in the national kitty with assurances that the money would be returned in July. The highest amount was sought from the National Bank of Pakistan (NBP).
Sources added in most of the cases banks have already deposited the deducted the amount and are contesting the FBR’s claims. An NBP official said the FBR has demanded Rs20 billion from the state-owned bank. The official, speaking on condition of anonymity, said the bank has already paid Rs11 billion.
An official spokesperson for the FBR said the reconciled amount against NBP was now Rs8.4 billion.
NBP’s Chief Corporate Communications Manager Amir Abbasi said “in connection with monitoring withholding tax deduction by the bank for the years 2008, 2009 and 2010, FBR served notices against which the bank provided reconciled statements along with evidences to support tax deposit.”
Another FBR official said the tax collectors have also demanded Rs1.6 billion from the Trading Corporation of Pakistan (TCP) on account of short deduction and deposit of taxes.
“FBR has sent a wrong order to TCP and the corporation has written a letter to the FBR chairman to set aside the order, as it is unjustified,” replied the media wing of TCP.
Parliament had approved a Rs1,667 billion tax target for financial year 2010-11. Seeing massive shortfall, the government later revised the target downwards to Rs1,588 billion.
“If the target is not achieved, you will have my neck,” was the commitment the FBR chairman was said to have given to the International Monetary Fund.
The government has already levied Rs53 billion in additional taxes and gave effect to next year’s revenue measures from June 3, 27 days before the start of new fiscal year. Despite all this, the government is uncertain about achieving the target.
According to provisional figures, FBR collected Rs1,439 billion by June 21 and the figure can increase to around Rs1,450 billion. It still needs to collect another Rs138 billion to achieve the target.
Any shortfall in collection will not only widen the budget deficit but may also result in borrowing from the State Bank over and above the ceiling, said finance ministry spokesman Rana Assad Ameen. He, however, was confident that FBR would be able to meet the tax target.
Parliament had approved a budget deficit of four per cent of gross domestic product (GDP), which was revised to 4.7 per cent in the wake of floods. The finance ministry and the State Bank have agreed to keep government borrowing at Rs1,290 billion and retire any debt above this limit.
The finance ministry is insisting that it will be able to keep budget deficit below six per cent. “The government is expecting a tranche of $300 to $500 million from the US on account of coalition support fund by end-June,” said the finance ministry spokesman. He said until May CSF receivables have again crossed $1.8 billion.
Published in The Express Tribune, June 25th, 2011.
Tax authorities have hatched a plan to cover any possible shortfall in revenue collection by literally resorting to arm-twisting of banks, as the Federal Board of Revenue (FBR) faces a gigantic task of collecting Rs140 billion in the remaining one week of the outgoing fiscal year.
FBR has sent notices to various banks for not depositing withholding tax, which they collected on account of profit on debt and dividends. FBR has asked various banks to release Rs30 billion on account of short-filing, FBR Chairman Salman Siddique told The Express Tribune early this week.
Sources said that according to the plan, banks have been asked to deposit the amount in the national kitty with assurances that the money would be returned in July. The highest amount was sought from the National Bank of Pakistan (NBP).
Sources added in most of the cases banks have already deposited the deducted the amount and are contesting the FBR’s claims. An NBP official said the FBR has demanded Rs20 billion from the state-owned bank. The official, speaking on condition of anonymity, said the bank has already paid Rs11 billion.
An official spokesperson for the FBR said the reconciled amount against NBP was now Rs8.4 billion.
NBP’s Chief Corporate Communications Manager Amir Abbasi said “in connection with monitoring withholding tax deduction by the bank for the years 2008, 2009 and 2010, FBR served notices against which the bank provided reconciled statements along with evidences to support tax deposit.”
Another FBR official said the tax collectors have also demanded Rs1.6 billion from the Trading Corporation of Pakistan (TCP) on account of short deduction and deposit of taxes.
“FBR has sent a wrong order to TCP and the corporation has written a letter to the FBR chairman to set aside the order, as it is unjustified,” replied the media wing of TCP.
Parliament had approved a Rs1,667 billion tax target for financial year 2010-11. Seeing massive shortfall, the government later revised the target downwards to Rs1,588 billion.
“If the target is not achieved, you will have my neck,” was the commitment the FBR chairman was said to have given to the International Monetary Fund.
The government has already levied Rs53 billion in additional taxes and gave effect to next year’s revenue measures from June 3, 27 days before the start of new fiscal year. Despite all this, the government is uncertain about achieving the target.
According to provisional figures, FBR collected Rs1,439 billion by June 21 and the figure can increase to around Rs1,450 billion. It still needs to collect another Rs138 billion to achieve the target.
Any shortfall in collection will not only widen the budget deficit but may also result in borrowing from the State Bank over and above the ceiling, said finance ministry spokesman Rana Assad Ameen. He, however, was confident that FBR would be able to meet the tax target.
Parliament had approved a budget deficit of four per cent of gross domestic product (GDP), which was revised to 4.7 per cent in the wake of floods. The finance ministry and the State Bank have agreed to keep government borrowing at Rs1,290 billion and retire any debt above this limit.
The finance ministry is insisting that it will be able to keep budget deficit below six per cent. “The government is expecting a tranche of $300 to $500 million from the US on account of coalition support fund by end-June,” said the finance ministry spokesman. He said until May CSF receivables have again crossed $1.8 billion.
Published in The Express Tribune, June 25th, 2011.