Punjab govt to hire services of consultants, contractors to expand tax net

LAHORE: To expand the tax net in the province, the Punjab government has decided to hire services of contractors and consultants with active taxpayer status.

In this connection, the Punjab Finance Department has sent a letter to all relevant provincial departments, stating that the government was resolute in expanding its tax base through better taxation policies and administration. “As part of this initiative, it is vital for all administrative departments, companies, authorities and autonomous bodies to ensure that any contractor or consultant engaged must maintain an active taxpayer status and be registered with the Punjab Revenue Authority (PRA) since it works as a neutral tax law enforcement agency ensuring that the government’s due tax share in economic activities was reaped to the optimal level,” it added.

The finance ministry also directed all the relevant departments that before entering into or renewing any contract, they should ensure that the contractor or consultant was listed as an active taxpayer by PRA. Moreover, it advised them that it would be prudent to include clauses in contracts that make it mandatory to maintain active taxpayer status with the PRA throughout the contract period.

In the notification, it was clarified that Section 2(1) of the Punjab Revenue Authority Act 2012 provides the definition of active taxpayer which states that active taxpayer means a registered person whose registration has not been suspended or blacklisted by the authority; who has filed his tax return for at least one of the preceding three consecutive tax periods.

It may be mentioned that Punjab’s own-source tax revenue collection stood at Rs286 billion in FY22, which constitutes 13.1 percent of revenue (general revenue receipts) and 0.78 percent of the estimated provincial GDP.

Recently, the provincial government has shown commitment to improving its tax policy and administration to achieve higher growth in its own-source tax revenue and subsequently increase the ratio of own-source tax revenue to GDP. In this connection, it formulated Revenue ‘Mobilisation Strategy and Plan FY 2023/24-FY 2025/26’.

As per the plan, the government aims to use tax policy to pursue other high-priority public policy objectives, such as documentation of the economy. It noted that enhanced documentation, along with integration of databases and sharing of data among federal and provincial governments, would contribute to an increase in revenue mobilisation in the country as a whole and help the Punjab government in making effective policies and decisions.

Copyright Business Recorder, 2023