"Govt weighs law for digital economy boost

 "Govt weighs law for digital economy boost "

Caretaker PM Kakar Aims for Digital Economy Boost

In a bid to digitize the economy, the interim government is exploring legislative changes, empowering the Ministry of Information Technology to play a central role in data collection, and expanding the tax base beyond 4.2 million filers.

Sources reveal that discussions on increasing income tax return filers were held, involving Caretaker Prime Minister Anwaarul Haq Kakar and the Special Investment Facilitation Council (SIFC).

The Federal Board of Revenue (FBR) presented suggestions during a briefing to the prime minister, which were further discussed at the SIFC meeting.

The Ministry of Information Technology proposed a central role in data collection to boost the tax base, which was approved by the SIFC.

Minister Umar Saif emphasized the digitization of the economy and taxation system, aiming to bring more people into the tax net and collect due taxes.

While the formal and informal economies are similar in size, work is underway to enhance digitization.

Currently, there are 7.6 million registered entities with the FBR, but only 4.2 million filed returns in the last fiscal year.

An ordinance to digitize the economy is under consideration, with a four-month lifespan, providing a basis for Ministry of Information Technology efforts.

Two task forces will be established, with the ministry playing a significant role.

FBR's performance was reviewed at the SIFC meeting, but solutions may not address core issues.

The FBR proposed a new authority for registering taxpayers, which could involve another ministry due to a lack of human resources.

Some participants were unimpressed with the 30% tax collection increase, attributing it to high inflation.

A 50% domestic tax collection is seen as necessary to meet year-end targets, despite import tax declines.

Challenges like excluding agriculture income from federal control and protections for traders, exporters, and wholesalers contribute to a low tax-to-GDP ratio of 8.6%.

A new visa regime for foreign businessmen was also announced, aimed at promoting business in Pakistan.