Cut in WHT lines, implementation of track and trace system: DLIs lagging behind targets, says World Bank

ISLAMABAD: The Disbursement Linked Indicators (DLIs) regarding reduction in withholding tax (WHT) lines and implementation of track and trace system are lagging behind the targets under the Pakistan Raises Revenue project, says the World Bank.

Official documents revealed that the Bank has rated the overall implementation progress of Pakistan Raises Revenue project of worth $400 million moderately satisfactory, observing that Federal Board of Revenue (FBR) will prepare a strategy to address challenges and improve implementation of DLIs.

The Bank’s official documents revealed that $327.93 million, i.e. 81.98 percent of the financing have been disbursed so far while undisbursed amount stands at $64.35 million.

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The Bank has stated that overall satisfactory progress is noted towards achievement of project development objectives. There is improved performance in several Disbursement Linked Indicators (DLIs), as confirmed by the third party validation report and the World Bank team. It includes: i) publication of detailed tax expenditure and evidence-based revenue forecast report (2); ii) functional data sharing with all provincial tax authorities (DLI 3); iii) surpassing the target for risk-based audits, as FBR completed 113 comprehensive field audits of large taxpayers and 784 issue-oriented audits (DLI 6); iv) piloting single returns portal for GST and GSTS with four provincial GSTS authorities, covering the telecom sector (DLI 7); v) improved customs efficiency with reduced physical inspections at border – from a baseline of 65% goods declared through red and yellow channels in FY19 to 29% in FY24 (DLI 8); vi) elimination and replacement of previously paper-based processes with newly automated internal business processes (DLI 9); and vii) the continued tracking of Key Performance Indicators and publication of the annual results report for FY23 and a bi-annual report for fiscal year 2024. The annual report for fiscal year 2024 is being finalized (DLI 10). However, DLIs 1 (reduction in WHT lines) and 4 (implementation of track and trace system) are lagging behind relevant targets. FBR will prepare a strategy to address challenges and improve implementation of these DLIs.

The procurements under component 2 have shown substantial progress. In particular, large procurements of hardware and software for data center, and equipment for customs automated entry-exit system are in process.

The technical streams have not been established in FBR. However, FBR officers are assigned to different positions relevant to technical/core and non-core functions, such as procurement, internal audit, communications etc. To design/re-design training for core and non-core functions, a need -based training plan is being developed by FBR.

Procurement is underway for AEES related hardware and software, to be delivered by December 2024 / January 2025. Some components of Automatic Entry & Exit System (AEES) are being introduced including: Pre-Arrival Clearance system is deployed in WeBOC. Under this setting Terminal Operators (TOs) are getting electronic messaging regarding the release of cargo before arrival of the vessel.

In collaboration with the collectorate of Customs Appraisement (East) and South Asia Pacific Terminal (SAPT), a pilot run of Automated Exit has been conducted. The collectorates are liaising with TOs to make necessary adjustments in their business processes, hardware and software to put in place the requisite system for fully functional AEES.

Copyright Business Recorder, 2024