Pakistan's Tax-to-GDP Ratio

Pakistan’s Tax-to-GDP Ratio

Pakistan’s tax-to-GDP ratio

The country’s tax rate is now at 9.2 percent, according to the 2021-22 Federal Board of Revenue (FBR) report.

According to the report, Pakistan’s tax-to-GDP ratio is low compared to other countries in the region but has increased significantly in recent years. In 1950 the figure was 4.4 percent and has now risen to 9.2 percent.

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Continued reform efforts are expected to further improve the tax-to-GDP ratio in the coming years, the report added.

FBR chairman Asim Ahmad said the fiscal year 2021-22 (FY22) has witnessed a wave of global inflation, supply chain disruptions, high-interest rates, and devaluation of emerging market currencies. Despite these challenges, Pakistan’s economy has performed well thanks to appropriate political and operational interventions.

Not only has the economy continued its recovery path from the Covid-19-related recession, but it is also gaining growth momentum. Real GDP recorded steady growth of almost 6 percent during the year. Revenue collection performance was very good in FY22.

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Initially, a revenue collection target of Rs 5,829 billion was allocated for FBR which was later revised up to Rs. 6.100 billion. FBR exceeds this revised target increasing the overall Rs. 6,148.5 billion.

In absolute terms, collections in FY 22 were Rs. 1,403.5 billion more than the previous FY, an impressive 29 percent growth, added the FBR chairman.

Pakistan’s tax-to-GDP ratio