The Federal Board of Revenue (FBR) agreed to expand its tax base by identifying millions of new taxpayers by utilising automated data sharing and ICT-based business intelligence, as part of the $400 million Pakistan Raises Revenue Project (PRRP).
According to the agreement, Independent Verification Agents (IVAs) will verify the registration, filing, and tax payment of new taxpayers who respond to FBR notices each year.
Officials highlighted the ongoing challenge within the FBR regarding the distinction between filers and non-filers, noting that many enter the tax system to lessen their tax burden during taxable transactions but subsequently choose to exit or file nil returns.
The IVAs are tasked with confirming the engagement and tax compliance of new taxpayers, whether they responded to FBR notices or were identified through other means.
As part of the loan conditions for the project, the FBR has implemented a rule for selecting audit cases based on risk, limiting such selections to only 10% of cases, pending approval by the Member Audit.
The FBR’s Audit Wing has been restructured to include Compliance and Audit Units. It has successfully conducted field audits on 85% of large taxpayers and 15 issue-oriented audits over five years, selected using a risk-based tool and overseen by the Compliance Unit.
An audit is deemed complete once the final report is submitted to FBR management, regardless of any subsequent legal challenges by the taxpayer.
WB will assess FBR’s adherence to these regulations, specifically the limitation of audits selected outside the risk-based tool to a maximum of 10% annually.
The effectiveness of the WB’s project, which extends until June 2025, remains to be seen, especially in terms of expanding Pakistan’s limited tax base.
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We don’t need World bank help to enhance our taxation revenue. Will to implement and courage to execute any plan in this regard will be key
Another avenue for the corrupt govt officials to make money at the expense of the country. Do we really need $400Mn funds to enhance or tax base, when technology has become cheap and affordable. I am sure a few dedicated officials with help from local IT firms could have designed and implemented a excellent system.