Prime Minister Anwaarul Haq Kakar has refrained from endorsing the restructuring plan proposed for the Federal Board of Revenue (FBR), citing constitutional concerns and uncertainties surrounding the proposed National Tax Authority's (NTA) mandate.
According to sources, PM Kakar's reservations have prompted the establishment of another committee, chaired by Dr. Shamshad Akhtar, to reassess the FBR's restructuring, initially recommended by a task force led by Dr. Akhtar. This new committee will include Fawad Hasan Fawad, the Federal Minister for Privatisation, and officials from the PM's Office, National Database Registration Authority, and the FBR.
Several proposals outlined by the task force, aligning with previous recommendations from the 2015 Tax Reforms Commission, have faced setbacks. The formation of an NTA to oversee both federal and provincial taxes raised concerns about provincial autonomy and the validity of interim measures.
The task force highlighted the provinces' low tax collection, emphasizing the potential to boost revenue at the regional level. However, PM Kakar deferred the approval of the FBR restructuring proposal, leading to its exclusion from the recent Special Investment Facilitation Council (SIFC) meeting.
Recommendations like establishing a separate Tax Policy and Revenue Division faced similar opposition, causing delays in approval. The proposed autonomous Tax Administration Oversight Board and its collaboration with NADRA also faced scrutiny and were deferred by the PM.
Further suggestions, such as segregating Customs from the FBR to prioritize trade facilitation and border controls, did not garner PM Kakar's approval, necessitating further review by the new committee, including Fawad Hasan Fawad.
Despite the restructuring setbacks, PM Kakar has sanctioned alternative administrative measures, focusing on expanding the tax base. The FBR aims to introduce regulations for inter-departmental data sharing and allocate 30% of the existing workforce to district tax offices. Additionally, the approval for levying taxes on retailers, amounting to three times the business premises' rental value, has been granted. The FBR will introduce a mobile app, 'Tajir Dost,' to aid retailers in tax calculations and payments, disbursed in 12 monthly installments and adjustable during return filing.
These measures aim to enhance tax collection and administration without undergoing the proposed structural overhaul of the FBR, addressing concerns raised by the PM.
