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What is the current state of the FBR’s Tax collection efforts?

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This excerpt discusses Prime Minister Shehbaz Sharif’s directive to hire a foreign consultant to modernize the Federal Board of Revenue (FBR) in Pakistan, deviating from the previously approved restructuring plan. The PM emphasized the urgent need for international consultants and suggested waiving international competitive bidding rules if necessary. This decision raises concerns about the implementation of the FBR restructuring plan approved by the previous caretaker government.

Former Finance Minister Dr. Shamshad Akhtar presented her plan virtually, with a potential follow-up presentation to the PM. The aim is to modernize and digitize the FBR to enhance efficiency and reduce physical contact between tax officials and taxpayers. However, questions have been raised about the impact of two foreign loans totaling $700 million from the World Bank and Asian Development Bank for FBR modernization and domestic revenue mobilization.

The PM also expressed dissatisfaction over delays in implementing orders related to installing scanners in manufacturing units, particularly in the tobacco industry, due to funding constraints. Additionally, there were discussions on hiring competent individuals to oversee a track and trace system targeting underreporting by various industries. The focus on digitization and expanding the tax net, including retailers and wholesalers, aligns with the International Monetary Fund’s call for increased tax revenues. The FBR aims to bring 1.5 million additional taxpayers into the system this fiscal year through digitization initiatives like digital invoicing.

Despite achieving revenue targets, concerns remain about tax returns filed this year compared to previous periods. The PM highlighted the importance of digitization for combating corruption within the tax machinery and directed the immediate implementation of digital invoicing legislation

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