Impact of FBR on Pakistan’s Financial

Landscape
By: Rafay Tiwana-251693994 BUSN321/G

When in the August of last year my Uncle was made the Chairman of FBR,
my interest in finacial performance of Pakistan increased tremendously. Since
then, I have been keeping an eye on new policies and directives by FBR and
analysing thier impacts. It's a great experience to hear about personal
opinions of those in high office and then see how their decisions have
impacted on a day to day scale. It has also come to my attention that how
important the role of the premier tax collecting institution really is on finacial
pulse of Pakistan.
In this Article I have set out to highlight few policies and how they have
impacted finances of Pakistan through the lens of tax collection, which is a
perspective that has been alien to me till very recently.
Federal Board of Revenue (FBR), formerly known as Central Board of
Revenue, is the revenue collection agency of the Government of Pakistan.
According to FBR’s website, the CBR was created on April 01, 1924 through
enactment of the Central Board of Revenue Act, 1924. By the enactment of
FBR Act 2007 in July 2007 the Central Board of Revenue has now become
the Federal Board of Revenue.
It is essential to the administration and collection of sales tax, customs
duties, income tax, and other taxes. The following are ways that the FBR has
impacted the financial situation of Pakistan
The FBR's main responsibility is to gather money for the government.
Efficient tax collection guarantees the government's financial resources to
support its spending on infrastructure development, public services, and other
critical initiatives.
The FBR's performance is closely linked to the government's fiscal policy.
By effectively collecting taxes, the FBR contributes to the implementation of
the government's fiscal policies, which can include measures to control
inflation, manage the budget deficit, and promote economic stability.
Ensuring tax compliance is a major responsibility of the FBR. Enforcing
tax laws and regulations contributes to the development of an equitable and
transparent tax system. This can promote taxpayer compliance and help to
increase public confidence in the government.
By incentivizing efficient tax collection can aid in the reduction of the
informal economy's size. Increased accountability and transparency in
business dealings may result from this.
By guaranteeing a steady stream of government funding, an efficient FBR
can have a positive effect on economic development. Investments in human
resources, infrastructure, and other initiatives that support economic
expansion can be made using the money raised.
The Federal Board of Revenue created history by collecting Rs.1021 Billion
in December, 2023 and after adjusting refunds of Rs.38 billion issued during
the month, reached a net collection of Rs.984 billion. Targets for the month as
well as for the first six months of the current financial year were also
surpassed. According to the FBR Press Release on December 31, 2023, it was
stated that; ‘Target for the first six months was Rs.4425 billion (as agreed
with IMF), which was surpassed by 43 billion and recorded a collection
of Rs.4468 billion’. FBR in the corresponding six months of the previous
year collected Rs.3428, thus registering an increase of more than 1 Trillion.
Moreover, FBR committed to eliminate tax evasion in the Sugar industry.
‘Affixation of tax stamps is mandatory on each and every bag of sugar
produced or supplied violation of which is a punishable offence under
section 33(23) of the Act and liable to confiscation of
products.Furthermore, the defaulter upon conviction can also face
imprisonment upto 03 years’ -
All these policies can also be related to common accounting concepts.
Accounting plays a pivotal role in operations of FBR.
In recording transactions both individuals and businesses must keep proper
financial records, which serve as the foundation for calculating taxes. For
determining taxable income, accounting records such as cash flow
statements, balance sheets, and income statementsprovide crucial
information.
The estimation of taxable income is guided by accounting rules. Financial
statements are vulnerable to a number of adjustments, deductions, and
exclusions in order to determine the amount of income that is taxable.
Tax authorities may carry out audits to confirm that financial records are
accurate and that tax regulations are being followed. To make sure that
reported figures correspond with the real financial activities, auditors rely on
accounting information.
Sales tax and value added tax (VAT) are essential parts of tax systems.
These transactions must be accurately recorded in accounting systems, and
companies are required to declare and pay the relevant taxes in accordance
with their sales.
Automated accounting systems play a major role in the electronic filing
requirements of modern tax systems. Correctly maintained accounting
software makes it easier to electronically submit tax-related data in an
accurate and timely manner.
Implementation of stricter policies against tax evasion demonstrates the
commitment of FBR to enforce compliance and exceeding revenue targets
indicates that the FBR is effectively administering tax collection processes.
Conclusively, it is not just about collecting taxes but also about creating an
environment that encourages economic growth and investment. A balance
between taxation and economic policies is essential for the overall well-being
of Pakistan's finances.

REFERENCES;
https://www.fbr.gov.pk/introduction-fbr/131167/57
FBR Press Release November 29, 2023.
https://www.fbr.gov.pk/pr/fbr-committed-to-eliminate-tax-evasion-in-
sug/173952
FBR Press Release on December 31, 2023,

https://www.fbr.gov.pk/pr/fbr-makes-history-collects-more-than-1-trilli/
173960