Tax collection optimisation goal in focus

ISLAMABAD: The steering committee meeting of the Pakistan Raises Revenue Program (PRRP) here on Monday explored innovative approaches to enhance the efficiency of tax collection mechanisms and ensure equitable distribution of the tax burden.

Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb chaired the meeting.

The meeting focused on strategies to enhance Pakistan’s revenue generation capacity. During the meeting, participants discussed various initiatives and reforms aimed at broadening the tax base, improving tax compliance, and reducing revenue leakages.

FBR finalises August collection strategy

The committee explored innovative approaches to enhance the efficiency of tax collection mechanisms and ensure equitable distribution of the tax burden.

The Steering Committee Meeting concluded with a strong consensus on the need for concerted efforts to implement the PRRP and achieve its objectives. The government will continue to engage with stakeholders and take necessary steps to ensure the successful implementation of the program.

The World Bank has stated that the Disbursement Linked Indicators (DLIs) regarding reduction in withholding tax (WHT) lines and implementation of track and trace system are lagging behind the targets under the Pakistan Raises Revenue project.

Official documents revealed that the Bank has rated the overall implementation progress of Pakistan Raises Revenue project of worth $400 million moderately satisfactory, observing that Federal Board of Revenue (FBR) will prepare a strategy to address challenges and improve implementation of DLIs.

The Bank’s official documents revealed that $327.93 million, i.e. 81.98 percent of the financing have been disbursed so far while undisbursed amount stands at $64.35 million.

The Bank has stated that overall satisfactory progress is noted towards achievement of project development objectives. There is improved performance in several Disbursement Linked Indicators (DLIs), as confirmed by the third party validation report and the World Bank team. It includes: i) publication of detailed tax expenditure and evidence-based revenue forecast report (2); ii) functional data sharing with all provincial tax authorities (DLI 3); iii) surpassing the target for risk-based audits, as FBR completed 113 comprehensive field audits of large taxpayers and 784 issue-oriented audits (DLI 6); iv) piloting single returns portal for GST and GSTS with four provincial GSTS authorities, covering the telecom sector (DLI 7); v) improved customs efficiency with reduced physical inspections at border – from a baseline of 65% goods declared through red and yellow channels in FY19 to 29% in FY24 (DLI 8); vi) elimination and replacement of previously paper-based processes with newly automated internal business processes (DLI 9); and vii) the continued tracking of Key Performance Indicators and publication of the annual results report for FY23 and a bi-annual report for fiscal year 2024.

The annual report for fiscal year 2024 is being finalized (DLI 10). However, DLIs 1 (reduction in WHT lines) and 4 (implementation of track and trace system) are lagging behind relevant targets. FBR will prepare a strategy to address challenges and improve implementation of these DLIs.

The procurements under component 2 have shown substantial progress. In particular, large procurements of hardware and software for data center, and equipment for customs automated entry-exit system are in process.

The technical streams have not been established in FBR. However, FBR officers are assigned to different positions relevant to technical/core and non-core functions, such as procurement, internal audit, communications etc. To design/re-design training for core and non-core functions, a need -based training plan is being developed by FBR.

Procurement is underway for AEES related hardware and software, to be delivered by December 2024/January 2025. Some components of Automatic Entry & Exit System (AEES) are being introduced including: Pre-Arrival Clearance system is deployed in WeBOC. Under this setting Terminal Operators (TOs) are getting electronic messaging regarding the release of cargo before arrival of the vessel.

The meeting was attended by the Minister of State for Finance & Revenue Ali Parvez Malik, Chairman Federal Board of Revenue (FBR), Secretary Economic Affairs Division, Secretary PD&SI, Secretary Maritime Affairs, Tania Airdus CEO Waseela, Salman Nasir CEO Ayesha Spinning Mills Ltd., Kamran Khalid Chief Product Officer Netsol Technologies, senior officers from concerned ministries and FBR, and key stakeholders from the private sector and relevant agencies.

Copyright Business Recorder, 2024