The World Bank (WB) has completed mid-term review of the Federal Board of Revenue (FBR) with the remarks that most of the irreversible reform initiatives are on track which would act as building blocks for maintaining the momentum of on-going projects.
Sources told Business Recorder on Thursday that the FBR Chairman M Abdullah Yusuf and his team of tax managers convened a day-long meeting with the WB mid-term review mission on the conclusion of bank's assessment of Tax Administration Reforms Project (TARP).
On completion of thorough review of the TARP, the mission has expressed its satisfaction over the current pace of reforms saying, "mid-term review mission is pleased to note that the FBR reforms objectives are either being met or are in the process of completion within the stipulated project period, although some specific activities may not be completed within the original closing date (December 31, 2009) of TARP".
The WB has further informed the FBR that the façade of Pakistan's tax administration set-up now looks better than the tax administration in other countries of South Asia. Both the government and FBR management are committed or appeared to be committed to the reforms programme and most of the reform activities are broadly on track whereas many irreversible actions have been taken for achieving the project development objectives.
The mission has highly appreciated 13 major reforms initiatives of the TARP. These included promulgation of the Federal Board of Revenue (FBR) Act; introduction of Universal Self Assessment Scheme (USAS); rollout of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs); rollout of home grown IT systems like Tax Management System (TMS), Sales Tax Management System (STMS), CREST, STARR, STREMS computer programmes and Nexus, a system to broaden the tax-base; cleansing of taxpayer data record; simplification of formats of tax returns; web-based filing of returns by corporate bodies; streamlining of refund system/clearing a huge backlog; reduction in number of appeals/adjudication cases; design/launch of Pakistan Customs Computerised System (PaCCS) pilot project at three container terminals; Human Resource Development (HRD) action like Internal Job Posting (IJP), performance management system, integrity and training; taxpayer facilitation through helplines, website and Kiosks centres in popular market places along with enforcement and audit.
The WB observed that these irreversible actions have a clear message to all stakeholders within and outside the FBR that reforms have come to stay. They are now the building blocks on which to build further reform actions will be initiated. While the reforms are by no means completed yet, they are firmly entrenched in the system and have developed the momentum to continue to their planned conclusion.
According to the mission, the FBR dedicated team headed by Member Tax Policy and Reforms Habib Fakhruddin have made the reform process successful. When asked about the status of TARP, sources said the WB had given 'moderately unsatisfactory' status to TARP based solely on the less expenditure made on projects from WB funded amount.
The board has spent an amount of Rs 630 million on reform projects till June 30, 2007. The FBR has completed many reform initiatives from its own annual budget. Thus, major reforms were completed with little funding of the World Bank. The status of the TARP would be changed by the WB once the restructuring of the reform program is finalised.
In this connection, the board would complete restructuring of the project by October 31 for changing the status of TARP. The restructuring of the project encompasses withdrawal of certain projects, which were originally conceived in the TARP. Similarly, some new projects would be incorporated in the TARP which were not originally conceived in the programme.
Taking into account this aspect, the board would submit a realistic estimates for spending in the next two and a half years under the TARP. Sources said that there is no change in the basic concept of the whole TARP to be completed by 2009.
The WB-midterm review mission has submitted the following recommendations on conclusion of the meeting: The board should finalise disbursement plan; revise project implementation plan; revise Project Management Unit (PMU) for all wings to change the project implementation plan; strengthen directorate of training; continue implementation of audit plan through partial resumption of field audit; build audit capacity; conduct sectoral analysis; further analyse baseline survey; initiate requirement gathering for data warehouse; launch post-clearance audit and initiate project to maintain computerised record of files through electronic database.
About the implementation of the FBR Act, 2007, the board has informed the WB that the Act would be implemented on finalisation of the subordinate legislation. For example, Income Tax Rules were issued to implement Income Tax Ordinance 2001 and FBR Rules would be issued to make FBR Act 2007 operational.