Islamabad, April 29, 2024 – The National Assembly of Pakistan took a significant step forward in tax reform by approving a new money bill aimed at amending existing tax laws, which promises to streamline the tax litigation process and strengthen tax compliance across the country.
On Monday, lawmakers gathered in National Assembly to pass the Tax Laws (Amendment) Bill, 2024, which includes key changes designed to expedite the resolution of tax disputes and potentially unlock substantial revenue currently mired in litigation. The bill was introduced as a supplementary agenda item, and Minister for Law and Justice Azam Nazeer Tarar spearheaded its passage.
The newly approved legislation targets the backlog of appeals pending before the Commissioner Inland Revenue (IR) Appeals and Appellate Tribunals, with a strategic aim to streamline procedures and reduce the duration and complexity of tax litigation. The Appellate Tribunal IR (ATIR) serves as the final fact-finding authority within the fiscal statute’s appellate hierarchy. However, it has been burdened by an excessive caseload and various operational inefficiencies, including an arbitrary constitution of benches and delays in the fixation and disposal of cases.
As per the government’s data, these inefficiencies have tied up approximately Rs 2 trillion in revenue, significantly impacting the national treasury. The amendments introduced in the Tax Laws (Amendment) Bill, 2024, are expected to address these systemic issues by implementing procedural changes that facilitate quicker resolution of disputes.
Key features of the bill include the establishment of a ‘Director General Law’ within the Federal Board of Revenue (FBR), tasked specifically with overseeing and expediting the disposal of tax-related litigation. This move was highlighted by the Attorney General of Pakistan, Mansoor Awan, during a meeting of the Senate Special Committee. The committee convened earlier to review and recommend provisions in the Money Bill.
During the discussions, Federal Minister for Law and Justice Azam Nazeer Tarar, alongside FBR Chairman Malik Amjed Zubair Tiwana and other senior officials from the Finance Division and FBR, emphasized that the bill would act as a crucial mechanism to curb tax evasion. This legislative effort is seen as a part of broader government initiatives aimed at expanding the tax base and alleviating the country’s ongoing financial challenges.
In addition to creating the new FBR position, the bill proposes significant changes to the appeal process. It reduces the appeal period before the High Court from ninety days to thirty days and limits the jurisdiction of Commissioner Appeal to cases where the tax value does not exceed Rs 10 million. For disputes involving tax assessments over Rs 10 million, appellants must now approach the Appellate Tribunals directly.
The passage of the Tax Laws (Amendment) Bill, 2024, after detailed deliberation and amendments by the Special Committee, marks a pivotal moment in Pakistan’s fiscal policy landscape. By addressing long-standing issues in tax litigation and enforcement, the government aims to foster a more efficient, transparent, and robust tax system, thereby strengthening economic stability and promoting greater compliance among taxpayers.
As the amendments take effect, all stakeholders, including taxpayers and legal practitioners, are advised to familiarize themselves with the new procedures, ensuring compliance and readiness to adapt to the revamped legal framework governing tax disputes in Pakistan.
