Sales tax gets new enforcement structure to cut collection gap

Pakistan’s government will divide sales tax and income tax duties among specialised Inland Revenue Service officers, responding to a sales tax shortfall estimated at Rs3.4 trillion. Dawn reported that the shift will start at Large Taxpayer Offices on Dec 1, then cover Corporate Tax Offices and Regional Tax Offices, with completion targeted within two months. A dedicated FBR member for sales tax and federal excise will oversee technical work and coordinate enforcement.

The taxes will remain within the IRS, but separate sales tax teams will be formed from commissioner level down, while chief commissioners retain administrative control. The FBR is assessing officers for suitable assignments; selected teams will examine underreported sales and questionable input tax claims. Internal estimates put sales tax at nearly 55pc of the combined Rs6.2tr revenue gap, with about 90pc of sales tax receipts coming from 15,000 taxpayers. Dawn also reported that monitoring in 12 manufacturing sectors reduced the gap by 12 percentage points over two years, unlike seven sectors where it rose by nine points.