The World
Bank has agreed a loan
agreement of $518 million to Pakistanfor reforms to
enhance tax
revenues and reduce compliance cost to provide better services to the
public.
The bank approved $400 million loan for the Federal
Board of Revenue (FBR) to increase its tax to gross
domestic product ratio from 13%
to 17% and enhance the number of income tax return filers,
among other reforms.
The other $118 million will go to revenue mobilization and public
resource management project of the country’s northwest
Khyber Pakhtunkhwa province to increase its capacity for revenue collection and
the management of the province’s resources.
Aim
of the agreement:
The project aims to simplify the tax regime and strengthen the tax and customs administration. It
will also support the FBR with technology and digital infrastructure and
technical skills.
This will enable more effective use of taxpayer
information and more targeted compliance as there are only 18 lakh people file
income tax returns.
World
Bank’s Report:
World Bank said that Pakistan’s revenue
performance has improved significantly to 12.9%
in fiscal year 2017-2018 against 9.5% of GDP in fiscal year 2011-2012 owing
to tax policy measures.
It said that this is still lower than
the level needed by developing countries, of at least 15% of GDP, to
fund basic government functions and provide services to people.
