Govt to restructure FBR, customs to be separated from revenue collection

The caretaker Finance Minister Dr Shamshad Akhtar announced the government's decision to implement reforms in the Federal Board of Revenue (FBR), including the separation of customs from the revenue collection mechanism.

Speaking on the second day of the Future Summit, she said that the customs' role will now focus on "tracking" smuggling, while revenue collection remains the primary mandate of the FBR.

The customs department, currently operating within the FBR, is responsible for collecting taxes on international trade and preventing the cross-border movement of contraband goods.

Typically contributing less than 15 percent to the FBR's total tax collection, which includes income tax, sales tax, and federal excise duties, the customs' functions, will be redefined as part of the restructuring.

Dr Akhtar emphasized that this move is a step towards the overall restructuring of the FBR, and a notification to this effect is expected to be issued next week. She also mentioned that additional notifications outlining further FBR restructuring measures will follow.

Additionally, the government is actively working on the separation of tax policy and revenue division within the FBR. This initiative aims to eliminate the perceived conflict of interest in tax collection, signaling a commitment to enhance transparency and efficiency in the revenue collection process.

Addressing concerns related to the National Finance Commission (NFC) award, Dr. Akhtar expressed reservations similar to her predecessors in the finance ministry.

She criticized the hasty devolution of subjects and the disproportionate transfer of government revenues from the center to the provinces more than a decade ago through the NFC award.

While acknowledging the challenges of reversing such decisions in a political setup, she noted that the federal government is working with the provinces to transfer provincial components of expenditure back to the respective provinces.