Islamabad, November 24, 2023 –Pakistan has developed a new documentation law aimed at bringing wholesalers and retailers under the tax net.
Dr. Shamshad Akhtar, the Federal Minister for Finance and Revenue, announced that the law has been prepared to ensure automatic information sharing from all relevant institutions.
Under this initiative, the Federal Board of Revenue (FBR) and the National Database Regulatory Authority (NADRA) will collaborate in establishing a comprehensive big data bank. Dr. Akhtar revealed that the Chairman of NADRA has been appointed as the head of a high-level technical committee to facilitate this collaboration.
It’s noteworthy that NADRA has already been granted powers under income tax laws. According to Section 175B of the Income Tax Ordinance, NADRA is mandated to share its records and any relevant information with the FBR to enhance the tax base or fulfill the objectives of the Income Tax Ordinance.
NADRA is authorized to submit proposals and information to the FBR for broadening the tax base. Additionally, it can identify instances where income, receipts, assets, properties, liabilities, expenditures, or transactions have escaped assessment or are under-assessed. The agency can also highlight misdeclarations or misclassifications under specific income heads. Furthermore, NADRA is empowered to enter into a memorandum of understanding with the FBR for secure information exchange.
The FBR, under the guidance of the finance minister, is expected to exceed the targeted revenue collection of Rs9.4 trillion due to increased demand from the expenditure side. Notably, in the first quarter, the FBR has already surpassed the targets set by the International Monetary Fund (IMF). Dr. Akhtar affirmed that any revenue shortfalls would be addressed with additional measures.
The ongoing process of restructuring and transformation within the FBR has received attention at the highest levels of government. Dr. Akhtar informed that a briefing on this matter has been provided to the Prime Minister, emphasizing the correction of FBR’s internal governance and the development of an oversight mechanism.
As part of the restructuring, the finance minister outlined key changes, including the separation of tax policy and revenue division. The FBR will focus primarily on collection, while a distinct division will handle the Tax Policy and Revenue framework. Customs will also be separated from the FBR, enabling it to concentrate on trade facilitation and border controls.
Furthermore, a novel retailer scheme is in the works, intricately linked with wholesalers and distributors. This initiative aims to streamline operations and enhance transparency within the supply chain, ensuring a more efficient and accountable system.
Dr. Akhtar expressed confidence that these comprehensive reforms, coupled with the collaborative efforts of NADRA and the FBR, will not only bolster revenue collection but also contribute to the overall economic stability and growth of Pakistan. The government’s commitment to structural reforms underscores its dedication to fostering a business-friendly environment and ensuring financial integrity.
