The government is initiating a restructuring process within the Federal Board of Revenue (FBR), separating the Inland Revenue Department from the Customs Service. This move is occurring at a time when the tax machinery faces the challenge of achieving a 120 percent growth in domestic taxes to meet the January 2024 target. There is concern about a potential decrease in taxes from imports during January 2024, necessitating additional efforts to achieve the assigned targets in domestic taxes.
As part of the restructuring, the government is proposing the abolition of the centralized reporting system to the FBR Chairman. This proposal has created confusion among the entire tax machinery, leading to concerns and potential opposition from junior officers in various tax offices.
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Tax experts highlight that major amendments in the Federal Board of Revenue (FBR) Act 2007 are necessary for the proposed restructuring. Legal issues surrounding the restructuring plan need to be addressed, and amendments to the FBR Act may require approval from the Parliament or through an ordinance passed by the next government.
The proposed restructuring includes the creation of Customs Oversight Board and Inland Revenue Oversight Board, each comprising 10 members. The Customs Oversight Board would involve officials from various divisions, including Revenue, Finance, Commerce, and experts in international trade, security, and e-commerce. The Inland Revenue Oversight Board would have members from Revenue, Finance, Commerce, as well as experts in international tax law, income tax, sales tax, and technology.
Some experts argue that instead of creating separate Inland Revenue and Customs Boards, the existing Policy Board under the FBR Act of 2007 should be strengthened. The Policy Board already provides guidance on the vision, mission, and values of the Board, as well as policy guidelines in framing fiscal policy and achieving goals and targets.
The restructuring plan raises questions about its legal feasibility and potential challenges in implementation, emphasizing the need for careful consideration of legislative aspects. The restructuring process will likely have significant implications for the functioning and coordination of different tax departments within the FBR.
