Govt asked to replace PRAL with new entity

ISLAMABAD: The Tax Reform Commission (TRC) has asked the government to abandon FBR’s IT arm-Pakistan Revenue Authority Limited (PRAL) and come up with a new entity having an independent board comprising of nine professionals.
The PRAL was incorporated in June, 1994, to deal with automation of tax administration and its operations.
The company was 100 percent owned by defunct CBR, government of Pakistan.
Its board of directors comprised of six directors, which included the chairman and five CBR Members.
“PRAL’s performance is far from satisfactory… compared with the overall organisation, the time consumed, and expenditure incurred,” the commission said.
In 1998, the Commission on Tax Reform recommended that CBR may consider merger of PRAL with CBR.
Since autonomous and loose structure of PRAL offered easy rent-seeking opportunities, the recommendation was neither implemented – nor even ever considered for implementation.
The current IT backbone of the FBR is provided through PRAL. This system is not responding satisfactorily to the requirements of both the executive and the taxpayers as it is full of problems.
The TRC recommends that the current PRAL should be allowed to die down once this independent system is in place and during the interim period, PRAL could be headed by a CEO and the governance should be provided by a reconstituted board.
The new PRAL should have an independent board of nine professionals.
Chairman FBR, Member IT, Member Customs and Member IR (operation) should be the members representing FBR. A nominee of NADRA could also be a board member. Four professionals with strong IT background should be nominated on the board.
This board should provide good governance and set the policy agenda for PRAL and steer PRAL towards being one of the best in its class.
A CEO of PRAL should be urgently recruited through open/transparent process. A high caliber CEO with IT background is sine quo non for the future of FBR.
The CEO should be selected through open public advertisement based on his ability, aptitude, competence, IT background and past experience. The CEO should be a team leader and team player.
PRAL needs to put out a clear roadmap and resources needed to become a dynamic and responsive entity. Strict time lines should be obtained and enforced. PRAL has to be put under an independent board consisting of professions and PRAL should be headed by an IT professional recruited in a transparent manner through public advertisement. The staffing in PRAL should be rationalised with the best talent available in market. PRAL should not be made an employment entity for relatives of FBR officials.
The CEO’s role that TRC envisages is that(s) he should provide “thoughtful leadership” in PRAL so that it can develop a state-of-the-art Tax Intelligence Network for FBR where data and information is well managed, easily accessible, can be used repeatedly and various interactive processes are user friendly.
In addition to the CEO of PRAL, specialist data scientists should also be recruited who should develop and explore and examine previously hidden information from existing data from different sources and assemble data from disparate sources.
PRAL should develop systems of visual analytical techniques to facilitate visual analysis of data across multiple domains, data mining and simulations. This would be critical for broadening the tax base.
No modern tax administration can perform its tasks efficiently without using modern information technology (IT). Main candidates of IT implementation by tax administrations include taxpayer records, tax collection, internal management & control, broadening of tax base, law & procedures and systems to keep the taxpayer compliance costs low.
The information technology plays a pivotal role in almost every organization but it is essentially required in the tax administrations, which should be used with extra care because of its far reaching negative and positive effects on the national economy. The tax administrations can perform wonders by making systemic and effective use of the information technology in all tax domains especially in the area of taxpayer facilitation and enforcement which is the key to enhancing the tax to GDP ratio in the country.
FBR is one of those organizations in the world who have unified control over the Inland Taxes as well as the taxes related to imports and exports, therefore electronic linkages of these domains is administratively simple which can further strengthen the IT System of FBR in maximizing documentation, minimizing revenue leakages and facilitating trade through risk and selectivity based systems.
On the other hand, private sector in the country has introduced IT in its processes to a great extent and use of IT in the public sector is also fairly good. The electronic linkages and regular flow of data from all the electronically available sources of data within FBR, Public Sector organizations and private sector it is extremely important for tax officers so that they may have a 360 degree view of the taxpayer with complete supply chain while deciding the tax cases.
FBR has already created a national data warehouse but the same has not been seamless. Its coverage and usage needs to be enhanced through regular inflow of data electronically from all the data sources and employing latest data mining techniques.
The data so collected by FBR should also be shared with the provincial revenue authorities for broadening of tax base at the provincial level and similarly the provincial tax administrations should share their data with FBR for improving the tax to GDP ratio of the country.