RTO targets traders as export slowdown hits revenues

Authorities say Rs160b annual tax target still achievable

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FAISALABAD:

The Regional Tax Office (RTO) Faisalabad has intensified efforts to broaden the tax base by targeting retailers, wholesalers, distributors and traders amid a slowdown in export-related collections and stagnant import tax revenues, officials said.

Chief Commissioner RTO Dr Shah Khan, while speaking to media representatives, said the authority is working to achieve an annual tax collection target of Rs160 billion by June 2026 despite emerging economic pressures linked to regional geopolitical tensions since late February 2026.

He said the ongoing Iran-US-Israel conflict has started impacting trade flows, with export-related collections and import-linked taxes showing a noticeable slowdown from the second week of April.

He pointed out that the full trade cycle affects tax collection with a delay of nearly 45 days to two months, and the current downturn is now being reflected in withholding taxes, sales tax, import income tax and export-related tax streams.

Dr Shah Khan said earlier import and export sectors showed 15% to 20% growth, but this momentum has now stalled, putting pressure on revenue targets.

He added that in response, the tax administration is focusing on alternative revenue streams, including audit closures, recovery of outstanding dues, stock-taking exercises and increased field visits across sectors such as textiles, processing units, hospitals and marquees.

He said Faisalabad's monthly average tax collection stands at around Rs14 billion, with nearly 60% coming from income tax, including domestic and import-related sources, while the remainder is contributed through sales tax and federal excise duty.

However, he noted that major industries such as sugar and cement contribute their taxes in other jurisdictions due to production locations, affecting local figures.

Dr Shah Khan also pointed out issues of under-invoicing and misreporting in textile and processing sectors, stating that field teams are actively monitoring discrepancies between declared data and actual usage of raw materials.

He said enforcement teams regularly conduct inspections and audits to curb tax evasion and ensure compliance.

On broadening the tax net, the chief commissioner said the department is using multiple data sources including property records, vehicle registrations, club memberships and withholding tax data under Sections 236G and 236H to identify potential taxpayers.

He said CNIC-based data is being used to register new taxpayers and enforce return filing through notices, after which individuals become part of the formal tax system and subject to audit.

"Currently, the burden is disproportionately on existing taxpayers, but the goal is to bring more contributors into the system," he said.