Steps to boost coordination among provinces: World Bank notes slow progress on exchange of taxpayers’ data with FBR

ISLAMABAD: The World Bank has noted slow progress in measures to strengthen provincial coordination on exchange of taxpayers’ data with the Federal Board of Revenue (FBR).

Official documents related to Pakistan Raises Revenue project noted that the FBR has completed 67 comprehensive field audits of large taxpayers and big corporate entities for cases selected by the risk-based selection tools.

There is improved performance in several Disbursement Linked Indicators (DLI). There is a reduction in the number of withholding lines from 49 in fiscal year 2019-20 to 31 in the fiscal year 2021-22 (DLI-1) and the Finance Division has published the detailed tax expenditure for fiscal year 2021 and evidence-based revenue forecasts for fiscal year 2022.

The tax gap analysis report is being reviewed (DLI-2). On DLI-3, substantial progress is noted as all four provinces have adopted the FBR’s valuation tables for immoveable properties, and the Balochistan Revenue Authority has signed the MoU with the FBR on input adjustments. However, there is slow progress in measures to strengthen provincial coordination on exchange of taxpayer data.

There is encouraging progress in the implementation of Track and Trace (DLI-4), where e-monitoring of the production system has been installed in sugar and fertiliser sectors (implementation on fertiliser sector is pending verification), while cement and tobacco sectors are under way. The FBR has added 462,677 new taxpayers, identified through automated data sharing and ICT-based business Intelligence tools (DLI-5).

The documents noted that the FBR has also completed 67 comprehensive field audits of large taxpayers for cases selected by the risk-based selection tool and monitored by the Compliance Unit through AMIS, with associated reports to management (DLI-6).

On DLI-7, however, the progress has been slow – as the single returns portal has not yet become functional for provincial GST authorities – which is pending their agreement on GST harmonisation agenda. Progress has also been made in strengthening customs processing with the reduction in the frequency of physical inspections at the border – from a baseline of 60 percent goods declared through the red and yellow channels in 2018-2019 to about 34 percent in fiscal year 2022 (DLI-8). Simplification of FBR’s core business processes is proceeding and, to date, the FBR has completed the review, redesign or simplification and automation of 12 out of 16 business processes – ie, 36 out of 48 steps (DLI-9).

It further stated that the FBR has continued to track the Key Performance Indicators and published the biannual results report on its website, while the annual report is being reviewed for publication (DLI-10).

The FBR is planning to revise the PC1, which is expected to be approved by the end of calendar year 2022, allowing for the procurement of equipment as per revised amounts. Procurement under this component will need to be stepped up to meet implementation timelines and to deliver the approved pipeline packages, the bank added.

Copyright Business Recorder, 2022