3. Order of Presentation
• INTRODUCTION
• HISTORY
• Vision, Mission & Values
• P ESENT CULTUR
R E
• Recruitm and Selection
ent
• SW ANALY
OT SIS
• Current Status
• CONCLUSION:
4. Vision, Mission &Values Statement
• VISION
To be a modern, progressive, effective and credible
organization for optimizing revenue by providing
quality service and promoting compliance with tax and
related laws
• MISSION
Enhance the capability of the tax system to collect taxes
through application of modern techniques, providing
taxpayer assistance and by creating a motivated,
dedicated and satisfied, professional work force
• VALUES
Integrity – Professionalism – Teamwork – Courtesy –
Fairness – Transparency - Responsiveness
5. Organizational Structure FBR
CCFR
Secretary General/
Chairman
PRAL
Line Members Support Members Functional Members
Direct Taxes Tax Policy & Reform HRM
Sales Tax & Audit
Federal Excise Legal
Fiscal Research
Customs Administration and
Coordination Information
Management System
Note: Various DG Positions are also included in the top Management Facilitation &
Taxpayers Education
6. Strengths of FBR
• A Critical State Institution
Collecting nearly 90% of tax revenue of the State
Contribution towards federal and provincial total revenue (tax
and non-tax) is around 65%
Revenue collected is sufficient to meet 75% to 80% of
Government expenditure needs
Generation of resources for smooth economic management of
Federal as well as Provincial and Local Governments
Keeping the economy vibrant
Monitor Fiscal Policy through tax incentives to encourage flow
of FDI
7. Tax Reform Initiatives in Chronological
Order
• May 2001: Syed Shahid Hussain’s Committee
Report
• Aug 2001: IMF Mission Report
• Nov 2001: The Strategy Document on Tax Reform
• Nov 2001: Presentation to the President of
Pakistan
• Dec 2001: Approval of the Strategy Document
• Feb 2002: Establishment of Supervisory Council
• Jul 2002: Establishment of Cabinet Committee
for Federal Revenues (CCFR)
8. Recommendations
• CBR to have greater autonomy within the
Government structure
• Supervisory Council (now CCFR) to monitor &
review CBR performance
• Reorganize CBR and its field offices on functional
lines
• Merger of Income Tax, Sales Tax & Excise functions
– a step towards co-location and integration of
internal taxes
• Separate handling of Large Taxpayers
• Improve HRM strategy with respect to induction,
promotion, training and compensation of Employees
• Improve physical infrastructure and introduce One-
window operation
• Greater stress on taxpayers’ education, service and
facilitation
9. Need For Reforms
• Stagnant Tax Revenue
• Narrow Tax Base
• Primitive and antiquated tax administration
(cylindrical instead of functional)
• Complexity of tax laws and arbitrariness in
their application
• Relationship between tax payer and tax
collector largely adversarial
10. Objectives of the Reforms
• Mobilize resources as per budgetary projections
for improved economic management
• Widen taxpayers base
• Streamline tax and tariff rates
• Improve voluntary compliance and strive to
minimize adversarial relationship between
taxpayers and tax collectors through:
Simplification of tax laws and procedures
Taxpayer friendly environment
Making the system more transparent and efficient
Honest Tax Administration
11. Structure of Field Offices Prior to
Reforms
• Direct Taxes (Income Tax Etc.)
5 Regional Commissioners with
34 Zonal Commissioners
• Sales Tax and Federal Excise
6 Collectorates
• Customs
10 Collectorates
• Composite Collectorates
3 Collectorates
12. What had to be done under TARP
• Policy Reforms
Simplification of laws
Universal self assessment across all taxes
coupled with effective selectivity and risk based
audit of taxpayers
No immunities, fixed taxes and amnesties
Minimize dependence on withholding taxes
Elimination of exemptions
Tax Rates and Tariff reduction and rationalization
Effective Dispute Resolution Mechanism
13. What had to be done under TARP
• Administrative Reforms
Re-structuring the top structure of FBR
Transform HQ and field offices on functional lines
Re-organize and upgrade infrastructure of field
offices (for domestic taxes – Federal excise Duty,
Income Tax and Sales Tax) i.e.,-
Large Taxpayer Units (LTUs) to deal with
major revenue spinner cases
Regional Tax Offices (RTOs) in major cities to
deal with all other taxpayers
Medium Taxpayer Units (MTUs) as pilot
projects to test the functional working of
Income Tax
Taxpayers’ Facilitation Centers (TFCs) in small
towns and cities
14. What had to be done under TARP
• Administrative Reforms - continued
Re-organize and upgrade infrastructure of field
offices (for international taxes – Import Taxes)
i.e.,-
Model Customs Collectorates (MCCs)
Trade and Passenger Facilitation Centers
(TFCs) at international borders and dry ports
Extensive Business Processes Re-engineering
(BPR)
Improved Human Resource Management
Concept of e-government
Automation and optimum use of latest IT
Technology
Restructuring and training of Human Resources
15. Current Status Of Policy Reforms
• Simplification of Tax Laws
New Income Tax Law – Income Tax Ordinance,
2001 and Income Tax Rules, 2002 introduced
New Federal Excise Law – Federal Excise Act,
2005 and Federal Excise Rules 2005 introduced
Customs and Sales Tax Law and Rules updated
and improved
Introduction of GST in VAT Mode to minimize
cascading
Zero-rating of five major export oriented sectors
to address the problems of processing of sales
tax refund claims and settlements and
governance
16. Current Status Of Policy Reforms
• Universal Self-Assessment
Successfully implemented in Income Tax and Federal
Excise
Further streamlined in Sales Tax
Partly implemented in Customs
• Effective Risk Based Taxpayers Audit
All corporate and non-corporate taxpayers (income
above certain threshold) are subject to Desk Audit
and if warranted by the facts followed by a detailed
audit
• Elimination of Exemptions
To a large extent exemptions have been eliminated
and is an on-going process
17. Current Status Of Policy Reforms
• Tax Rates reduction and rationalization – Income
Tax
Uniform Corporate tax rate of 35% for Public,
Private and Banking Companies (From 35%,
43% and 47% respectively)
Introduction of low tax rate of 20% for small
companies
Personal tax rates for salaried individuals
reduced and rationalized to 0.25% to 20% from
3.5% to 30%
Non-corporate tax rates reduced and rationalized
to 0.50% to 25% from 7.5% to 35%
18. Current Status Of Policy Reforms
• Tax Rates reduction and rationalization – Income
Tax
Introduction of fixed/final tax of 5% and 10% on
rental and interest income
Withholding tax rates rationalized
Gradual enhancement of tax-free threshold to Rs.
150,000 for salaried taxpayers and Rs. 100,000
for non-corporate taxpayers
19. Current Status Of Policy Reforms
• Tax Rates reduction and rationalization –
Sales Tax
Additional Sales Tax of 3% on sales made
to un-registered person withdrawn
Threshold of turnover subject to Sales Tax
raised from Rs.0.5 million to Rs.5.0 million
Aberrations like turnover scheme and
enlisting scheme abolished
20. Current Status Of Policy Reforms
• Tariff reduction and rationalization – Customs
Maximum standard rate reduced to 25%
Number of slabs reduced to five –0% 5%, 10%,
20%, 25%
Clear distinction between primary and secondary
raw materials, semi-finished and finished goods
Special incentives for capital goods including
plant, machinery, and equipment – reduced rate
of duty of 5%
Tariff protection to locally produced goods
21. Current Status Of Policy Reforms
• Dispute Resolution Mechanism – All Taxes & Duties
Withdrawal of all frivolous appeals by the
department before Tribunals, High Court and
Supreme Court of Pakistan
All first level appeals (within the department)
disposed off within two years (80000 appeals).
Now only (3000 appeals) are pending
At the Apex Court level special benches were
constituted at the request of FBR and a large
number of appeals on legal issues decided (1650
out of 1950) and the remaining are under process
(300)
22. Current Status Of Policy Reforms
• Dispute Resolution Mechanism – All Taxes & Duties
At the High Court level the cases are being grouped by
issues and taken up for hearing for speedy disposal of
appeals
Alternative Dispute Resolution Mechanism - Introduced
A unique system for speedy disposal of disputes between the
taxpayers and tax collectors in an un-conventional manner;
By honorary professionals and related business experts
Without any cost; and
Without foregoing the right of regular appeal process
23. Current Status Of Policy Reforms
• Others
Gradual phasing-out of Federal Excise Duty on
goods
Bringing services into tax net (Sales Tax) through
Excise Duty, due to constitutional constraint
24. Current Status Of Administrative
Reforms
• Functional Members
Five Members from Private Sector engaged
specializing in their respective fields i.e. Audit,
Facilitation and Tax Education, Fiscal Research and
Statistics, Human Resource Management and
Information Management System
• Re-structuring the Top Structure of FBR
First Phase has been completed and Second Phase
is to be completed by December 2009
25. Current Status Of Administrative
Reforms
• Transformation On Functional Lines
FBR (HQ) is working on functional lines i.e. Line
Members of Custom, Income Tax and Sales
Tax/Federal Excise and Support Function Members of
Audit, IMS, FRS, FATE, HRM and Legal since 2001
Income Tax department has also started working on
functional lines since July 2006
Audit & Inspection, Training, Intelligence, and
Valuation Directorates have also started working on
functional lines
Sales Tax department is also working on functional
lines
26. Current Status Of IT Initiatives
• Pakistan Customs Computerized System (PaCCS)
After Extensive Business Process Re-engineering,
the pilot project of (PaCCS) has been launched
PaCCS is a fully automated (state of the art) system
whereby WEB based electronic goods declaration is
processed and cleared without any human interface
Average clearance time reduced to four hours from
five days for imports and one hour for exports
PaCCS at present is handling clearance of imported
containerized full cargo load only
PaCCS fully operational and functioning smoothly at
KICT, the pilot site of MCC Karachi
27. Current Status Of IT Initiatives
• Pakistan Customs Computerized System (PaCCS)
PaCCS rolled out to PICT & QICT as additional
pilot sites
Customs automation and business process re-
engineering reforms in the rest of the country to
be completed by December 2007. Technical
Business Requirements and bidding documents
for acquiring automated system are being
prepared
In the interim period, homegrown automated
system by the name of ‘One-Customs’ has been
introduced at major customs stations pending
PACCS full implementation to improve the
present manual system of clearance
28. Current Status Of IT Initiatives
• Tax Management System (TMS) – A home grown
system
Deployed in all LTUs and RTOs in place for efficiency
and transparency
• Sales Tax Management System (STMS) – A home
grown system
Deployed in all LTUs and RTOs in place for efficiency
and transparency
• The two systems – TMS and STMS will eventually be
taken over by Integrated Tax Management System
(ITMS) to ensure international standards
29. Current Status Of IT Initiatives
• Integrated Tax Management System (ITMS)
Bidding documents under two-stage bidding procedure
forwarded to World Bank for their final approval
It is expected that the invitation to bid will be floated before
the end of the calendar year
The final delivery of the ITMS is expected by June 2009
• e-filing of Returns/W.Statements (Income Tax, Sales Tax ) has
been successfully launched
• Computerized System of Tax Payment Receipts (CPR)
developed in collaboration with NBP and SBP endorsed by MOF,
AGPR and CGA and implemented
30. Current Status Of IT Initiatives
• Other projects in hand
Data Warehouse
Human Resource Information System
Inventory Management System
Wide Area Net Work (WAN) – Independent for
FBR
Procurement of Hardware
31. Outcome of Reforms
• Gaining Stakeholders’ Respect
• Substantial reduction of corruption - Transparency
International Report
• Improved performance – Revenue targets not only
achieved but surpassed
• Creating business friendly environment
• Introducing professionalism, integrity, teamwork,
courtesy, responsiveness, transparency and
fairness
• Facilitating and providing service to the taxpayers
• Reducing the cost of doing business
• Adversarial relations to mutual trust and confidence
32. Outcome of Reforms
• Infused confidence among taxpayers through
regular facilitation and tax education which has
bridged the gap between taxpayers and tax
collectors
• Creation of an enabling environment for various
stakeholders which is:
Promoting Economic Activity
Encouraging Investment
Spreading Out Commercial Activities
Expanding Exports
34. Outcome Of Reforms
In Revenue Collection
(Rs. Billion)
Budget Revised
YEARS Estimates Estimates Collection Achievement (%)
B.E. R.E
1990-91 123.3 120.6 110.5 89.6 91.6
1991-92 149.5 145.0 139.8 93.5 97.8
1992-93 174.8 160.0 153.2 87.6 95.8
1993-94 190.7 180.3 172.6 90.5 95.7
1994-95 259.9 225.0 226.6 87.2 100.7
1995-96 270.5 264.8 268.0 99.1 101.2
1996-97 328.0 286.0 282.1 86.0 98.6
1997-98 324.0 297.6 293.6 90.6 98.7
1998-99 354.0 308.0 308.5 87.1 100.2
1999-00 362.5 351.7 347.1 95.8 98.7
2000-01 430.0 406.5 392.3 91.2 96.5
2001-02 457.7 414.2 404.1 88.3 97.6
2002-03 458.9 No Revision 460.2 100.3 NA
2003-04 510.0 No Revision 518.00 101.7 NA
2004-05 580.0 590.0 591.085 100.2 NA
2005-06 690.0 690.0 712.6 102.1 NA
2006-07 835.0 835.0 847.2 101.5 NA
NA means Not Applicable
35. Broadening of Tax Base
Taxpayers Population
Number of Taxpayers filing the returns up to December, 2007 is 2.04
million.
FBR has already taken some far reaching measurers to expand the tax
base, under which number of taxpayers and revenue are continuously
increasing such as :
• Universal Self Assessment Scheme
• Reduction in tax rates
• Enforcement of filing of statements by exporters, importers,
contractors, suppliers & salaried class
36. Strategy
Conducting sectoral studies for the
purpose of detecting leakages and for tax gap
analysis etc.
Providing incentives / benefits to those who
duly pay taxes and file returns to encourage
filling.
