FBR restructuring: Govt plans to separate Customs and revenue collection system

Caretaker Finance Minister Dr Shamshad Akhtar has announced that the government is implementing significant restructuring measures within the Federal Board of Revenue (FBR) to eliminate apparent conflicts of interest in tax collection and enhance overall performance. 

Speaking at the Future Summit organised by the Nutshell Group, she outlined the action plan for restructuring Pakistan’s tax administration, emphasising the crucial aspect of strengthening the internal governance of the FBR. 

One notable decision involves separating customs from the revenue collection mechanism. Customs will focus on tracking smuggling and related activities, while revenue collection will remain the exclusive mandate of the FBR. 

Akhtar noted that a formal notification for this change will be issued next week, with additional notifications expected for further FBR restructuring initiatives. 

Discussing FBR reforms, Akhtar highlighted the adoption of innovative digital technologies to broaden the tax base, minimise the tax policy and compliance gap, and increase tax collection. 

The government aims to reduce the share of the shadow economy by more effectively identifying non-filers and those under-reporting incomes or business activities. 

Furthermore, Akhtar revealed plans to separate the tax policy and revenue division, making it an independent entity reporting directly to the Minister of Finance. 

According to Brecorder, this move aims to eliminate perceived conflicts of interest in tax collection, emphasising the need for fair, equitable, and productive tax policy design. 

Collaboration with the National Database and Registration Authority (NADRA) is also underway to upgrade data systems, with a technical committee chaired by NADRA and FBR chairpersons established for this purpose. 

The overall objective is comprehensive tax administrative reforms and increased efficiency in revenue collection.