Sunday June 16, 2024

Cabinet greenlights FBR restructuring

Caretaker govt lays groundwork for restructuring, digitising tax authority on modern lines

January 30, 2024
Caretaker Prime Minister Anwaar-ul-Haq Kakar chairs meeting of the federal cabinet in Islamabad on January 30, 2024. — PID
Caretaker Prime Minister Anwaar-ul-Haq Kakar chairs meeting of the federal cabinet in Islamabad on January 30, 2024. — PID

ISLAMABAD: On the recommendations of the Revenue Division, the federal government has greenlighted the proposed plan to restructure and digitise the Federal Board of Revenue (FBR) to meet the globally recognised practices for managing tax and revenue affairs.

The revamp plan for the country’s tax authority was approved in the federal cabinet meeting held under the chair of caretaker Prime Minister Anwaar-ul-Haq Kakar on Tuesday.

The meeting was apprised of the recommendations of an inter-ministerial committee that held its meeting on the 23rd under the chair of caretaker finance minister.

During its previous meeting, effective amendments were made in the summary after a comprehensive debate which was submitted in the cabinet’s meeting today, PM Office Media Wing said in a press release.

“Given its constitutional and legal mandate, the caretaker government would only carry out the groundwork for the Federal Board of Revenue’s structural reforms, keeping in view the public interest, but legislation to effect these reforms would be left to the newly elected government,” the official minutes of the last cabinet meeting state.

Under the prescribed reforms, a Federal Tax Policy Board would be constituted in the Revenue Division that would be tasked to formulate tax policy, fixation on revenue targets and work for coordination among the stakeholders.

The federal minister for finance would head the Federal Policy Board. Under the new scheme, Customs and Inland Revenue departments would be separated and work under specific director generals in the relevant cadres who would also enjoy complete authority over the administrative, financial and operational matters.

Both officials would ensure the digitisation of their relevant departments and the implementation of globally recognised practices for transparency and addressing complaints.

The said departments would have separate oversight boards with the federal secretaries of ministries from finance, revenue, trade, National Database and Registration Authority (Nadra) chairman and relevant experts as its members whereas, the finance minister would head them.

The prime minister directed that a clash of interests should be avoided during the appointment of experts from the private sector.

He also asked that under the cabinet committee’s recommendations for reforms, a draft should be presented for necessary legislation and approval in the upcoming session of the newly elected parliament.

On the occasion, the caretaker prime minister and the cabinet members appreciated the untiring efforts of the ministers concerned, FBR chairman and other relevant authorities for the preparation of these reforms.

The meeting also endorsed decisions taken on January 26 by its cabinet committee on legal affairs but deferred amendments recommended by the Ministry of Water Resources concerning the Indus River System Authority (IRSA) Act 1992 and directed to resubmit it in the next meeting of the cabinet after a thorough debate.

It is noteworthy to mention here that the International Monetary Fund (IMF) has shared options to transform the FBR into a single national tax authority to administer all federal and progressively provincial taxes or restructure the present tax authority as a federal tax agency with coordinated linkages across all provincial tax agencies.

The Fund’s Technical Assistance Report on Revenue Administration Diagnostic, prepared by an expert in its Fiscal Affairs Department Robert Woods, proposed a future for the revenue authority and stated that the task force established by the government has developed different proposals to restructure the revenue administration.

It was proposed to revamp the tax authority as a performance-driven semi-autonomous revenue authority with its own service rules, recruitment, and management policies ultimately operating under a single-line budget.

It was also urged to ensure strong governance and performance management by appointing an independent tax oversight and administration board. It also recommended a fixed tenure for the head of the tax authority.