Govt plans to amend law to shift tax policy role from FBR to finance ministry

The government plans to amend the Federal Board of Revenue (FBR) Act, 2007 through the upcoming Finance Act 2026 to transfer tax policy functions from the FBR to a newly established Tax Policy Office within the Ministry of Finance, Business Recorder reported. 

Finance Minister Muhammad Aurangzeb informed the Senate Standing Committee on Finance on Wednesday that the proposed legislative changes would move the responsibilities of the FBR’s Tax Policy Board to the finance ministry. The shift is aimed at separating tax policy formulation from tax collection and administration.

The minister said the government has already created a Tax Policy Office in the Ministry of Finance to independently analyse fiscal matters and develop taxation policies. Under the proposed changes, Section 6 of the FBR Act, which relates to the FBR Policy Board, will be removed along with related provisions, as the board would become redundant.

FBR Chairman Rashid Mahmood Langrial told the committee that the tax policy function has already been taken away from the FBR and assigned to the Tax Policy Office. He said the office would prepare the tax proposals for the federal budget for fiscal year 2026–27, while the FBR would continue to handle operational and administrative responsibilities related to tax collection.

He added that amendments to the FBR Act and the Rules of Business would be required to grant the Tax Policy Office full authority to manage tax policy functions.

During the meeting, Senator Talha Mahmood questioned the move, saying tax policy development was a technical function that should remain under the FBR. He also criticised the perception of the tax authority among businesses and raised concerns about accountability within the tax machinery.

Responding to the concerns, the finance minister said the government was committed to addressing misconduct within the tax administration. He added that all civil servants, including FBR officials, are required to declare their assets to the government.

Langrial also informed the committee about another proposed amendment to the FBR Act that would empower the Secretary of the Revenue Division to appoint FBR members through transfers and postings of officers in grade 21 and above.

He said the change is intended to remove administrative ambiguities and ensure continuity in the tax administration. The authority to appoint the chairman and members of the FBR will remain with the federal government, while the revenue secretary will be authorised to make internal appointments from senior officers placed at the disposal of the FBR.