The International Monetary Fund (IMF) has underscored the critical need for Pakistan’s Federal Board of Revenue (FBR) to accelerate tax policy reforms. Delays in the implementation of reforms by the caretaker government have prompted calls for expedited action. Plans to transition the FBR into a semi-autonomous Revenue Authority have hit a snag, as the engagement of an international consulting firm prolongs the process.

Despite setbacks, progress has been evident in certain areas, such as the passage of a documentation law mandating data sharing with the FBR and collaboration with the National Database and Registration Authority (NADRA) for secure data transmission. However, the launch of a retailer registration scheme has been postponed, with tax collection set to commence by July 1, 2024, following the initiation of the first phase of registration.

Efforts to mitigate compliance risks have seen the identification of 39 high-risk cases by the Compliance Risk Management team, leading to the auditing of 31 cases and a projected additional revenue of at least Rs. 40 billion. Moreover, risk management training is set to extend to local offices across provincial capitals and Islamabad.

While the FBR’s annual revenue targets remain unchanged, risks of shortfalls in April and May 2024 are anticipated due to holidays, prompting the agreement on contingency measures. Additional efforts are deemed necessary to meet the revenue administration goals outlined in the Stand-By Arrangement (SBA).

Challenges persist in revenue collection from retailers, particularly in the tobacco sector, despite the implementation of track-and-trace systems. To bolster control over informal markets, the FBR plans to expand the track-and-trace system to commodities such as sugar, fertilizer, and cement.

Despite these challenges, the FBR has made significant strides, registering 1.1 million new filers and obtaining 170,999 new returns through enforcement measures, demonstrating its commitment to bolstering revenue collection efforts.

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