In a significant development, the Pakistani government has fulfilled another condition set by the International Monetary Fund (IMF) by retrieving key powers from the Federal Board of Revenue (FBR). According to a notification issued by the Ministry of Finance, the federal cabinet has established a Tax Policy Office within the Ministry of Finance, separating tax policy formulation from tax collection. Henceforth, the FBR will focus solely on tax collection.
The notification states that the FBR will concentrate on implementing tax proposals to increase revenue, while the Tax Policy Office will report directly to the Minister of Finance and Revenue. The office will work on developing the government’s reform agenda, analyzing tax policies and proposals, and submitting income tax, sales tax, and federal excise duty policy reports to the finance minister.
This move is in line with the government’s assurance to the IMF to maintain the autonomy of tax policy and collection. The government aims to reduce tax fraud by addressing loopholes and focusing on tax enforcement.
The retrieval of powers from the FBR is a crucial step towards meeting the IMF’s conditions, which is essential for Pakistan’s economic stability. By separating tax policy formulation from collection, the government aims to increase transparency and efficiency in the tax collection process.
