Prime Minister Shaukat Aziz will give final approval to the Federal Board of Revenue (FBR) draft law 2007 on (May 30) to make the revenue collecting agency more independent for broadening the tax-base in the coming budget.
Sources told Business Recorder on Tuesday that CBR Chairman M Abdullah Yusuf and his team would give a detailed presentation to the prime minister for conceptual approval of the FBR law. The CBR has been actively engaged in obtaining input from its legal adviser for finalisation of an Act making FBR more autonomous with proper legal backing.
The sources said that once the PM gives approval of the FBR law, it would be promulgated through Finance bill 2007-2008 in budget. The new law would be announced in the budget speech, as a revolutionary step to improve the operational capacity of CBR under the new organisational structure and reform programme.
The board has proposed new provisions in the FBR law 2007 to combat corruption putting in place integrity checks and system to form basis for promotion, incentives and transfers/postings of tax officials and employees. The autonomy of the CBR would be sought from Ministry of Finance taking into account the revised draft.
Federal Board of Revenue would comprise maximum seven members to be appointed for a period of three years. Chairman of the FBR would also be appointed for 3 years period, which is extendable for another three years. Th FBR would constitute an executive committee under the supervision of the chairman.
Federal board would be empowered to independently determine its own policies for recruitment, salaries, investment and operational methodology. It would be empowered to prepare its own annual budget and submit its report about the activities to the President every year. Annual account reports would be submitted before the Ministry of Finance as well.
The FBR would be bound to dispose of complaints of taxpayers within 30 days of the filing of representations about mal-administration and misbehaviour by any tax officer. Similarly, the board has to decide matters pertaining to Sales Tax Act, 1990; Income Tax Ordinance 2001 and Federal Excise Act, 2005 within the said period. Tax authorities would also be restricted to initiate immediate action in cases of unnecessary delays and hardship caused during administrative process of the department.
New mechanisms would be in place to remove grievances and complaints of the taxpayers. The law would allow the CBR to adopt modern effective tax administration methods, information technology systems and policies to consolidate self-assessment, minimise interaction between taxpayers/collectors, widen tax-base and proper enforcement of penalties.
The sources said that the proposed law had also empowered the board to setup subsidiary departments and engage any person or entity on a contract basis to carryout a particular assignment. It will allow the CBR to independently ink any agreement, contract and MOU with outside body, private entity, international organisation, institution and donor agency.
The FBR has proposed ample powers for the Human Resource Management (HRM) Wing for smooth implementation of the HR related policies. It would allow the authorities to independently chalk out the voluntary severance scheme including Golden Handshake for CBR employees. The wing would be empowered to transfer any official to any post in the subsidiary company. The law would also empower the board to initiate any action, issue rules/regulations, guidelines, code of conduct etc.
It would empower the HRM Wing to transfer, select or post official or employees against any post and evaluate employee's performance periodically to ascertain his fitness to retain the post. Powers to give incentives against any post would be available under the new law. Other provisions of the law related to the legal areas and administrative matters under the proposed FBR organisation, sources added.
Board has drafted FBR law and FBR rules separately. The FBR law would exclusively deal with the basic legal provisions needed for the financial and operational autonomy of the new organisation.
The law would also clarify overall governance arrangement and human resource management. The new law would provide greater autonomy to the CBR, both functional and human resource management authorities for effective implementation of the tax reforms and management of tax collection. The FBR Rules would be a compendium elaborating detailed procedure of working of the revamped organisation.
The board has decided to incorporate a provision in the FBR law to strictly monitor the performance of FBR employees through "Performance Management Criteria". The CBR will also constitute a legal forum for its employees to deal with their service-related matters so that the employees should contact this forum before moving the Federal Services Tribunal (FST). The new forum would be given legal backing in the FBR law.
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