Pakistan’s tax-to-GDP ratio in FY24 stands at 9%: FBR

July 09, 2024 (MLN): Pakistan’s Tax-to-GDP ratio stood at 9% during the fiscal year 2023-24, according to the Federal Board of Revenue (FBR) report.

The FBR’s evidence-based revenue forecasting report 2024-25 said the tax-GDP ratio remained in the range of 8.7% to 9.2% over the past six years.

Last year, the tax-GDP ratio was 8.5%. However, during the fiscal year 2023-24, it has started to improve and stood at 9.0%, it said.

The FBR said that the traditional methodology has been adopted to forecast FBR revenues for FY2024-25.

The autonomous growth has been applied on base year FY2023-24.

An increase of Rs1.922 trillion is forecasted for FY2024-25, thus bringing the expected revenue collection without budgetary measures to Rs11.174tr.

The projected target is 20.8% higher than the expected collection of Rs9,252tr for FY2023-24.

The FBR said that most of the taxes are buoyant and are positively correlated with actual variations in macroeconomic indicators used in the forecasting model.

Hence, there is potential for achieving growth in tax revenues, provided that macroeconomic indicators perform well.

With the improvement in local and global economic conditions, the tax revenues are expected to increase accordingly.

Similarly, removing import restrictions further, the tax collection at import stage shall improve as well.

The growth trend of FBR collection over the past five years’ period FY2019 to FY2023 shows an increasing trend except FY2019 wherein collection fell by negative 0.4%.

However, in the following years revenue growth started picking up. The collection crossed Rs7tr mark for the first time in the country’s history during FY2023.

During 9MFY24, the FBR revenue collection grew substantially i.e. by 30.2%, when compared with the corresponding period of 9MFY23. All tax heads have recorded a positive growth.

Copyright Mettis Link News