ISLAMABAD: Global consulting firm McKinsey & Company announced on Tuesday that data sharing among key stakeholders is actively underway, aiming to compile high-quality data to identify non-filers and individuals evading income tax, sales tax, and customs duties.
The first meeting of the Task Force on the Digitalization of the Federal Board of Revenue (FBR) took place on Tuesday at FBR Headquarters. The meeting was chaired by Minister of State for Finance and Revenue Ali Pervez Malik and co-chaired by DG C41, Major General Syed Ali Raza.
Participants included Chairman FBR Rashid Mahmood Langrial, members and senior officers of the Board, along with Task Force members such as Ghazi Akhtar from Lotte Akhtar Beverages Ltd, Asif Peer from Systems Ltd, Amir Malik, CEO of PRAL, Tania Aidrus, and Gohar Marwat, Project Officer at NADRA. Waqas-ul-Hasan and Fareed Zafar attended virtually.
Sources revealed that a new documentation law and the enhancement of the National Database and Registration Authority’s (NADRA) powers are being considered to achieve FBR’s digitalization objectives. NADRA will engage with provincial authorities to provide comprehensive tax data, facilitating the digitization process to broaden the tax base. Meetings will be held to assess the provinces’ capabilities in supplying the necessary data, with NADRA specifying the required data categories.
In his opening remarks, the State Minister for Finance emphasized that the Prime Minister has established the Task Force to propose recommendations for fully digitizing FBR’s systems. He highlighted that end-to-end digitization is crucial for Pakistan’s transition to inclusive and sustainable growth. The Task Force’s ultimate goal is to formulate policy interventions that enhance FBR’s efficiency and revenue generation capabilities.
DG C41 stressed that the government’s reform agenda aims to increase the country’s tax-to-GDP ratio for greater revenue generation. He urged the implementation of various initiatives to achieve tangible results.
Chairman FBR reiterated the Revenue Division’s commitment to maximizing revenue through data automation and software solutions. He urged committee members to provide practical recommendations to accomplish the task, emphasizing the need for system integration and the deployment of new technologies to modernize the tax agency.
Ali Malik from McKinsey provided a detailed presentation on the progress made towards FBR’s digitization. He outlined the firm’s focus on two key areas: the overall digitization of FBR and the identification and implementation of quick wins. Data sharing among key stakeholders is progressing, aiming to compile high-quality data to identify non-filers and tax evaders. He also highlighted four key areas—income tax, sales tax, customs duty, and collections—where global experience and FBR’s existing data have identified opportunities for improvement.
The meeting included a thorough discussion on the Terms of Reference (TORs) for the Task Force, covering data sharing both vertically with provinces and horizontally across ministries, supply chain automation, the Track & Trace System through an integrated system, the restructuring of PRAL, and trade data sharing interfaces with trading partners. The need for a robust real-time data-sharing mechanism among major stakeholders to identify potential taxpayers and broaden the tax base was emphasized. The meeting concluded that leveraging the latest technological interventions and automating FBR systems could lead to a more formalized and documented economy, fostering sustained economic development.
The Task Force also decided to include representatives from SECP, the State Bank, and the Ministries of Commerce and Foreign Affairs in future meetings. Four Working Groups were established to further explore the TORs, with Gohar Ahmed Khan, Ghazi Akhtar (supported by Ziad Bashir), Asif Peer, and Tania Aidrus (supported by Ghazi Akhtar) appointed as conveners. These Working Groups will prepare draft recommendations in their respective areas and present them at the next Task Force meeting on August 21, 2024.
