ISLAMABAD   -    Pakistan has assured the Interna­tional Monetary Fund (IMF) for bringing further 0.3 million people into tax net and bringing new law for improving performance of State Owned Enterprises (SOEs).

“We will pursue a substantial ex­pansion of PIT (Personal Income Tax) base by another 300,000 persons, through the use of data on the with­holding tax of businesses and identi­fy for registration new individuals as well as use of third-party data. If re­quired, we will also conduct physical surveys to book new individuals,” the government has stated in the docu­ments sent to the IMF for the seventh and eighth reviews under the extend­ed arrangement.

Pakistan has also assured the IMF for improving its revenue admin­istration. “As of end-June 2022, we have accumulated Rs366 billion in income tax refund arrears, a 67 per­cent increase over the course of the fiscal year as a result of a backlog in processing refund claims. We will clear income tax arrears until the stock is reduced to Rs 225 billion, thus reversing the arrears accumu­lation during this fiscal year, and this will be completed by end-Sep­tember 2022.”

The government said it was com­mitted to limiting any future reoccur­rence of these arrears and to improv­ing tax administration to raise the efficiency of revenue collection and will redouble our efforts to: (1) sim­plify tax filing and expand e-services for taxpayers; (2) accelerate the res­olution of refunds and administra­tive appeals; and (3) strengthen the large taxpayer office. The revenue administration priorities are: (1) de­veloping an overarching compliance strategy and setting up a Central Risk Management Unit and a Compliance Risk Management Committee at the central level; (2) systematic identi­fication and assessment of compli­ance risks; (3) adopting a more proj­ect-based approach to addressing specific high-risk areas in tax com­pliance; and (4) strengthening data collection and analysis. To support GST harmonization, govt has estab­lished a single filing portal in Decem­ber 2021, which removes the need to file separately with five different tax administrations and simplifies ad­ministration with a single tax base, which will critically improve the ease of doing business and enhance the trust of taxpayers.

NEW LAW FOR SOES:

The government also informed the Fund that the National Assembly ad­opted its new SOE law in July 2022, which is now awaiting Senate ap­proval. “In line with IMF staff rec­ommendations and inter alia it will: (1) ensure that SOE operations are grounded on commercial footing, in­cluding by defining what constitutes a commercial SOE; and (2) regulate oversight and ownership arrange­ments”. In parallel, the government said it is working with ADB sup­port to finalize further regulatory reforms by end-December 2022, in­cluding seeking cabinet adoption of an SOE ownership policy. This will help operationalise the principles of the SOE law (once enacted) into a policy that clarifies ownership ar­rangements and the division of roles within the federal government; and Amending SOE-dedicated acts.