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KARACHI: In the cabinet meeting to be held Tuesday (Jan 23), proposals that envisage restructuring and reforms of the Federal Board of Revenue (FBR) will be tabled with an aim to take the tax machinery’s revenue as percentage of GDP to 12.7% by FY25, and 20% by FY27, well-informed sources told Business Recorder.

Reducing staff’s strength is not part of the proposals.

The proposals include:

  1. Formation of a Federal Policy Board, to be headed by the finance minister, with a new mandate for the Revenue Division

i. Oversight Board for Customs (along the lines of a corporate entity) and which will have the Customs Organisation reporting to it

ii. Oversight Board for Inland Revenue with the Inland Revenue organization reporting to it

iii. A Tax Policy Office within the Revenue Division

New fixed income tax for retailers on the cards

The Oversight Boards will be headed by an independent member chair and include secretaries of finance, commerce and revenue as well as industry/subject-matter experts.

The board will set Key Performance Indicators and monitor performance, along the lines of a corporate entity.

The Customs and Inland Revenue organisations will be headed by Director Generals who will report to the Oversight Boards.

The proposals also feature composition of the oversight boards with the finance minister being the chairperson along with Chairman NADRA, secretary of the finance, commerce and revenue divisions, economists and subject-matter experts along with director general Customs part of it.

The proposals also include:

  • Tax Policy Office to include customs and taxation experts along with economists for research analysis. This office will analyse sector-wise tax potential of the economy with equity and fairness being main considerations. It will have a core team of staff that would be permanent with support from the academia and the private sector.

  • Restructuring PRAL

  • Collaborating with NADRA

  • Digitisation to address issues such as under-invoicing, simplified schemes for traders, and enhance the number of taxpayers.

Sources indicated that the intent behind the proposals is to separate the collection and policy-formulation functions for better governance as it is a comprehensive package which includes restructuring, an innovative approach to governance, and, contrary to reports, there is no fragmentation.

Copyright Business Recorder, 2024

Bilal Memon

Bilal Memon is the Head of Digital Content at Business Recorder. His Twitter handle is @bilalahmadmemon

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