SIFC approves major restructuring of FBR, powers to formulate tax policies taken away

Restructuring aims to enhance revenue collection and address a budget deficit of around 8 percent of the GDP per annum

The Special Investment Facilitation Council (SIFC) has approved the restructuring of the Federal Board of Revenue (FBR), marking the second overhaul in 15 years.

Led by Prime Minister Anwaarul Haq Kakar, the council has endorsed the division of the Federal Board of Revenue (FBR) into two entities, stripping its powers to formulate tax policies.

Under the newly approved structure, two new boards will be established—the Federal Board of Customs and the Federal Board of Inland Revenue (IR). These boards will be led by separate chairpersons from the customs and Inland Revenue service groups, directly reporting to the finance minister.

The restructuring, approved by the SIFC this week, is set for implementation within one month. An FBR Restructuring Implementation Committee will be formed to strategize the execution before the upcoming general elections, as per top government sources.

The new structure eliminates the current form of the FBR, transferring the responsibility for formulating income tax, sales tax, and federal excise policies to the Revenue Division. The Revenue Division, headed by the Secretary of the Revenue Division, will consist of a tax policy office named the Federal Policy Board.

Following the SIFC’s decision, interim Finance Minister Dr. Shamshad Akthar chaired a meeting with stakeholders, endorsing the decision with some modifications.

The restructuring aims to enhance revenue collection and address a budget deficit of around 8% of the GDP per annum, addressing Pakistan’s growing financing needs and debt burden.

The SIFC has given the government one month to implement the restructuring, emphasizing the need for alignment with existing rules and laws. A potential Presidential Ordinance may be required for these legal changes.

This move represents the ninth attempt to reform tax policy and administration in the past 32 years, focusing on administrative improvements to enhance efficiency.

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