FBR attaches CAA bank accounts to recover taxes

In Business
March 30, 2024


The Federal Board of Revenue (FBR) has attached bank accounts of Pakistan Civil Aviation Authority (CAA) to recover taxes worth Rs13 billion, in a move that pushed it closer to the nine-month revenue target of Rs6.7 trillion.

Till the last official working day, the FBR collected Rs6.67 trillion, remaining short of the nine-month goal by Rs41 billion.

“Banks will remain open during holidays and we are in a position to achieve the nine-month target of Rs6.707 trillion,” said FBR Chairman Malik Amjad Zubair Tiwana while talking to The Express Tribune. He added that another payment of Rs34 billion would be received on Saturday.

Sources said that the FBR attached bank accounts of CAA and recovered Rs13 billion. The aviation authority had claimed income tax exemption on the back of two new enactments that parliament approved in August last year.

The tax exemption had not been given through the Income Tax Ordinance. It was the incompetence of the Law Division that vetted a bill which was not consistent with the main tax law – the Income Tax Ordinance.

The Express Tribune reported on Friday that Pakistan granted Rs50 billion in annual income tax exemption to two government departments in violation of the International Monetary Fund (IMF) programme and its own tax law.

CAA and Pakistan Airports Authority (PAA) were granted tax exemptions through two Acts of parliament weeks after approval of a $3 billion IMF standby arrangement (SBA).

Read Tax exemptions of Rs50b defy IMF

The FBR is of the view that the Income Tax Ordinance is the “only special law” dealing with taxation. Therefore, for taxes, neither the Pakistan Civil Aviation Act, 2023 nor the Pakistan Airport Authority Act, 2023 are special laws, it added.

Pakistan has agreed with the IMF that it will not grant any income tax exemption and if its monthly targets fall short, it stands ready to take additional revenue measures.

For March, the government had set the tax target at Rs879 billion while the nine-month (July-March) target was Rs6.707 trillion.

Till Friday, the last working day of March, the FBR collected Rs835 billion and it needed another Rs44 billion to achieve the monthly goal. Over the past two months, the FBR has missed its monthly targets.

A reason for remaining behind the nine-month target was the sudden release of Rs65 billion in withheld refunds to exporters. After assuming office, Prime Minister Shehbaz Sharif had instructed the FBR to immediately release the refund claims.

The PM said on Tuesday that he had ordered the FBR not to withhold taxpayers’ genuine refunds to inflate revenue collection.

The FBR also gave Rs369 billion in tax refunds in nine months, which was 45% higher than the last fiscal year. In March alone, the FBR released refunds of Rs67 billion compared to just Rs21 billion in March last year.

The FBR collected taxes of Rs6.67 trillion till the official working time, showing an increase of Rs1.51 trillion, or 29%, over the collection made during the same period of the previous fiscal year. Authorities hope that after the next two days’ collection, the growth rate will jump above 30%.

The FBR remains confident about achieving its Rs9.415 trillion annual target despite a slump in imports.

Published in The Express Tribune, March 30th, 2024.

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