ISLAMABAD: Pakistan has formally empowered the Tax Policy Office (TPO) to prepare tax proposals for the federal budget 2026-27 after amending the Rules of Business, 1973, in a move aimed at streamlining fiscal policymaking and strengthening institutional oversight.
The Cabinet Division issued the amended Rules of Business through SRO 687(I)/2026, bringing the TPO under the administrative control of the Finance Division. With this shift, the responsibility for drafting tax-related components of the Finance Bill—including income tax, sales tax, and federal excise duty—has been transferred from the Federal Board of Revenue (FBR) to the newly formalized office.
Officials said the change is intended to separate tax policy formulation from tax administration, aligning Pakistan’s framework with international best practices. While the TPO will now lead policy design and budget preparation, the FBR will continue to handle operational and administrative functions, including tax collection and enforcement.
The amendments also include the addition of sub-clause 33 to clause 12 in Schedule-II, officially establishing the TPO within the Finance Division. Furthermore, a newly inserted sub-clause 31C assigns responsibility for Finance Acts to the Finance Division, reinforcing its central role in fiscal governance.
Sources indicated that the creation of the TPO could render the existing Policy Board redundant, as policy responsibilities consolidate within the Finance Ministry. The move is expected to improve coordination, enhance transparency, and ensure more coherent tax reforms.
In a related development, the Strategic Digital Wallet Company has also been placed under the Finance Division’s administrative control, signaling a broader push toward financial digitization.
Additionally, the amended rules require government divisions to respond to inter-departmental communications within three working days. Proposals involving legal amendments submitted to the Cabinet Division must now include detailed comparative statements outlining existing and proposed provisions, ensuring greater clarity in decision-making.