The Khyber Pakhtunkhwa Revenue Authority has reported a tax collection of Rs. 17.158 billion in the 2019-20 financial year, over Rs. 10.354 billion in the year before despite the coronavirus pandemic. The 66% rise in taxes collected is being credited to a ‘tax acculturation’ policy where businesses and citizens are encouraged to pay income taxes.
A major portion of the tax revenue came from the telecom sector, which made up around 40% of the total tax collected in the province. The sector saw a 169% increase in tax collection, partly due to the Supreme Court suspending mobile recharge taxes in a suo moto case last year. The oil and gas sector also saw a sizeable increase of 105%, due to seismic surveys carried out in Kohat and Tal areas, which discovered large reserves of natural resources. Furthermore, the hospitality sector contributed an extra 20% in taxes over last year, despite turnover being heavily impacted due to lockdowns.
The KPRA is trying to make it easier for businesses to contribute to tax revenues by streamlining the taxation process. It is trying to alleviate pain points in the tax collection process such as jurisdictional disputes, overlapping of tax demands, and differences in the taxation process to name just a few. Moreover, the agency has introduced well defined and reduced tax brackets of 15%, 10%, 8%, 5%, and 2% to make tax collection more seamless and lessen the burden of taxes on businesses as well as increase their confidence in the tax collection process.
