ISLAMABAD: The task force on tax and Federal Board of Revenue (FBR) reforms, Tuesday, briefed the International Monetary Fund (IMF) technical team on tax policy reforms and restructuring proposals of the FBR. Sources told Business Recorder that the IMF technical team met different groups of the task force on tax and FBR reforms.
The meeting between the groups of the task force and the IMF technical team was held at the FBR Headquarters.
The task force group on FBR’s restructuring informed the IMF that the separation of tax policy from operations functions is part of restructuring proposals of the FBR.
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The second proposal is the creation of the proposed autonomous Federal Board of Customs (FBC). The proposal is to establish a separate Customs division under the Ministry of Finance with an autonomous FBC.
The task force group on controlling under-invoicing and smuggling also briefed the IMF technical team. The task force has proposed that an apex body or lead agency is required to supervise anti-smuggling activities and coordination among all anti-smuggling agencies and law enforcement agencies.
The head of all agencies would act as a coordinator between Customs and law enforcement agencies.
To check under-invoicing, task force has proposed that the valuation of the imported items be done with the help of risk management system linked with international database keeping in view prevailing international prices.
The Post-Clearance Audit System should be strong and interference of Customs Department in valuation of the imported goods through valuation rulings should be minimised.
There are 25-30 miscellaneous goods which need to be linked with the international pricing mechanism for accurate assessment of duties and taxes taking into account the risk management system.
The IMF technical team has been informed that besides seizure of smuggled goods, the actual persons behind smuggling and backend trial of the smugglers should be traced. The key check points need to be modernised with the help of latest equipment including scanners.
The task force groups on broadening the tax base and digitisation of economy held separate meetings with the technical team of the IMF.
The taskforce has the mandate to review tax policy measures to capture optimal tax base, correct tax gaps, and enhance economic efficiency and equity of the tax system.
One of the key terms of references (TORs) of the taskforce is to identify hurdles/ bottlenecks in tax collection and suggesting concrete technology-based measures to cope with the problems.
The taskforce would examine the tax expenditures of the government and propose a mechanism for cost-benefit analysis for any proposal of tax exemptions.
Copyright Business Recorder, 2023