Facilitating Ease of Doing Business Collections on the above heads constitute over 50 percent of the total revenue from the Federal income tax. Frequently, the number of transactions runs into the thousands. Consequently, many of the companies keep almost fully dedicated staff for collecting the withholding tax on the transactions and remitting the amount collected to the FBR. There are two solutions to this big problem. First, the scope for reducing the number of withholding taxes should be examined. Second, in view of the costs incurred by the withholding tax agents and the saving thereby to FBR, a system may be set for payment against the costs of collection. The first proposal is examined in Chapter 5. The cost of running the Federal Board of Revenue was Rs 27.7 billion in 2019-20. This is equivalent to 0.7 percent of total revenues. The 7 th National Finance Commission has allowed the Federal Government to deduct 1 percent of the revenues in the divisible pool of FBR taxes as the cost of collecting revenues. Therefore, FBR is saving 0.3 percent of the revenue due to the delegation of tax collection of many withholding taxes to companies. A logical recommendation is that a withholding tax agent should be compensated to the extent of 0.3 percent of the tax collection. This should help in the recovery of the costs incurred in performing the function of a withholding tax agent. The total amount of compensation would be in the range of Rs 3 to 4 billion. It would also provide an incentive for companies to act as more effective withholding tax agents. 5.3. Liquidity Impact of delayed Tax Refunds The business operations of exporting units have been adversely affected by the delayed refunding of sales tax and import duty on inputs in the‘zero rating’ regime. This has significantly impacted the liquidity position and constrained production for exports. The fluctuation in the magnitude of tax refunds year-to-year is given in Table 5.2. The refunds have been as low as 1 percent to 2 percent of exports in some years. FBR has used them as a way of coming closer to achieving the revenue targets for a particular year. Currently, almost Rs 200 billion of refunds are held up despite the setting up of the FASTER system. However, the payment against claims for recent refunds has improved. The proposal, which is presented in the Chapter on Promoting Exports, is that the refund should automatically be paid at the time of export receipt by the banking system at predetermined rates by export item to the exporters. 45