Major overhaul planned at FBR – Newspaper

ISLAMABAD: In a major restructuring, the government decided to restructure all the tax machinery and introduce a centralized collection of the general sales tax (GST) on services and goods.

The proposed measures were already approved by Prime Minister Imran Khan on October 3 with a restructuring plan to convert the current Federal Revenue Board (FBR) into the Pakistan Revenue Authority (PRA) with a deadline of June 2020 .

However, the proposed schedule was not as planned as the chief commissioners of the Internal Revenue Service (IRS) opposed the measure at a meeting held on Monday.

A source aware of the meeting said Dawn that IRS officials will hold another meeting on Tuesday with the president of the FBR to assess his concerns. Both tax groups, the IRS and customs, have also warned that they go on strike in case the government does not change the proposed plan.

Documents viewed by Dawn showed that, according to the proposal, the Ministry of Finance will prepare a comprehensive framework for the PRA and the centralized collection of GST on PRA services. These reforms are part of the "Pakistan Revenue Collection Project" funded by the World Bank.

The Board will be replaced by the Pakistan Revenue Authority; The PM wants the plan to be completed by
June 2020

On the issue of centralized collection of GST in services, it has been decided to establish a joint committee composed of representatives of the Ministry of Finance, the FBR and the provincial tax authorities to finalize a proposal.

The Ministry of Finance will develop the mechanism for the transfer of GST tax revenues on services to the provinces.

The decision to collect GST at the centralized level was taken on the grounds that the collection potential is not fully realized due to the problems of jurisdiction between the FBR and the provincial authorities. Jurisdictional issues and conflict of interprovincial interests also stifle the collection of GST in services.

It is likely that the measure is met with strong resistance from the provinces for being against the Constitution. Currently, provincial revenue authorities collect the sales tax for services following amendment 18.

Meanwhile, it was decided to reorganize the headquarters of FBR in functional lines that segregate the IRS and customs in the north and south areas. Two vice presidents are expected to be appointed for each IRS and customs before November 30.

Under the proposed functional hierarchy, the FBR president will lead the tax agency along with two vice presidents: the IRS and customs. In addition, a separate secretary for the Revenue Division will be appointed with four additional secretaries to discuss policy issues: customs policy, income tax policy, sales tax and federal excise taxes and international conventions, and financial actions.

In addition, the PRA will also have 12 members, including operations of southern and northern customs members and two more members for transit trade and exports; Legal and accounting.

In the case of the IRS, the PRA will have members of IR operations to the south and north, audit of taxpayers; legal and accounting, while four other members will be responsible for the management and administration of human resources, strategic planning, facilitation and education of the taxpayer and director of management information. There will be 18 DGs in BS-21 in the reformed PRA.

Under the proposed plan, six DGs will assist the operations of the personalized members, while another six will extend support for the operation of the IRS members. In addition, six additional DGs will be responsible for administration, audit, automation, surveillance, alternative disputes and revenue coordination.

It has also been decided to restructure regional tax offices (RTO), large taxpayer units (LTU) and customs colleges and district tax facilitation measures. The deadline for these reforms was set on December 31.

Each RTO / LTU will comprise tax units based on the number or category of taxpayers with tax assessment wings and legal wing. The legal wing will operate directly under the legal member order based on the FBR.

At the same time, the customs collection model will have collector's customs in BS-21 and legal collector in BS-21. Currently, customs collectors are in BS-20.

It has also been decided to appoint the director of information management until November 30 to automate the income tax architecture at WeBOC-Glo customs lines to minimize the human interface in the administration and collection of taxes. It was also decided to appoint the executive director of the PRA to accelerate the automation process.

Published on Dawn, November 5, 2019