FEDERAL BOARD OF REVENUE

The Federal Board of Revenue (more commonly known by its initials as FBR) is the semi-autonomous, supreme
federal agency of Pakistan that is responsible for auditing, enforcing and collecting revenue for the government
of Pakistan. FBR has the responsibility for (i) formulation and administration of fiscal policies, (ii) levy and
collection of federal taxes and (iii) quasi-judicial function of hearing of appeals. FBR is estimated to be the largest
federal bureaucracy in Pakistan. As the agency conducts audit of taxpayers regularly, it's regarded as the guardian of
national treasury in Pakistan. FBR primarily operates through its main collection arms, its field formations, the
Regional Tax Offices (RTOs) and Large Taxpayer Units (LTUs) across the country. FBR has two major wings: the
Inland Revenue Wing (Income Tax Department) which brings in about 54% of FBR's total collection and Customs
Wing now called as Pakistan Customs Service. Mostly in the media, the acronym 'FBR' is also often mentioned
when speaking in relation to Inland Revenue Officers (previously Income Tax Department officials) in Pakistan.
Income Tax Officers (now Inland Revenue Officers) are considered some of the very powerful officers in the
country. For the purpose of collection of revenue and pursuing tax evaders, FBR's powers & functions also include
but are not limited to: carrying out inquiries and audits/investigations into the tax affairs, commanding arrests,
attachment as well as public auction of movable and immovable assets of a non-compliant. Tariq Bajwa is the
current chairman of FBR; he was appointed by the Prime Minister.

FUNCTIONS OF LEGAL WING

1.

Grant of approval for filing of appeals/references before High Courts and CPLAs/Review before the
Supreme Court and to pursue litigation in courts.

2.

Assigning court cases, issuing Power of Attorney and monitoring performance of Legal Advisors and
Advocates on panel.

3.

Making recommendations for appointment of Legal Advisors and placement of advocates on panel of FBR.

4.

Coordination with field offices to ensure filing of para-wise comments and proper representation in each
case sub-judice before the courts.

5.

Coordination with field offices in respect of matters relating to the appointment of Advocates, ASCs and
AORs in court cases and fee matters of such advocates.

6.

Maintaining and updating the list of pending cases before the Supreme Court and High Courts on the
official website of FBR.

7.

Coordination with field offices and FTO office to ensure submission of reports to FTO, implementation of
FTO recommendations, filing of representation before the President and review before the FTO.

8.

Coordination with Law Division and Attorney General of Pakistan.

9.

Coordination in respect of matters relating to the National Assembly and Senate Standing Committees on
Revenue and Finance.

10. Coordination in respect of matters relating to Inter Provincial Coordination Committee.

11. Condonation of time limitations on requests made by the CsIR (A) and Collectors (A).
12. Monitoring of work of CsIR (A) and Collectors (A) and rationalization of work load of appeals.
13. Any other assignment given by the Chairman.

PAKISTAN TAX ADMINISTRATION REFORMS PROJECT

The development objective of the Tax administration Reform Project is to fundamentally reform the Central Board
of Revenue (CBR), for a more efficient and effective revenue administration system. The project aims to promote
voluntary compliance, increase the overall collection result, and guarantee fairer and more equitable application of
tax laws. Additionally, the new human resource policy framework and management system, combined with
modernized procedures, and institutional structure will lead to an increase in transparency and integrity of the tax
administration operations. The project aims to strengthen tax administration to contribute to the achievement of
fiscal targets, and facilitate the collection of optimum tax revenues. Project components are: 1) Management and
institutional development, to support and enhance the broader tax reform strategy by driving: strategic changes
within CBR's organizational structure; the transformation of the organization's culture and ethos; and, the
development of sound people-management policies and procedures. 2) Human resources development includes
developing an overall Human Resource Management strategy, towards developing a workforce rationalization
strategy, and implementation plan to reflect the rollout of a new functional organization. This will include an
employee contingency fund and redeployment, and the development of a performance evaluation system, based on
transparent criteria, towards an incentive structure, supported by staff training, and the required capacity building. 3)
Improving revenue operations will support extensive strategies and initiatives to transform the administrations of the
CBR's three revenue streams: Direct Tax, Sales Tax, and Central Excise; and Customs - a) from pure enforcement, to
a risk-based self-assessment systems based on voluntary compliance of taxpayers; and, b) from a mix of
organization structures of the three streams, to consistent ones, functionally-based, automated, and decentralized. 4)
Strengthening revenue services entails the establishment of a Tax Audit function, as a separate functional stream. 5)
Creating a tax compliant culture, through taxpayer education and facilitation, a communications program,
computerization, and appropriate registration systems. 6) Adopting responsive information technology (IT) systems,
to move from a highly manual to an automated environment. 7) Infrastructure upgrading and development, will
focus on the improvement of work spaces, equipment and supplies.

ARTICLE ON REFORMS

Pakistan continues to face deep fiscal crisis which cannot be resolved easily. Taxes are insufficient to meet Pakistan's
debt servicing and defense needs. The tax-to-GDP ratio does not enable Pakistan to counter inflation or improve
governance, deliver quality public services or improve human resource to reach a take-off stage for economic
development. To address these issues, GoP initiated a Tax Administration Reforms Program (TARP) in FBR in the
year 2005 to achieve objectives to include overall increase in the revenue collection for achieving fiscal targets;
increase in tax to GDP ratio through broadening of the tax base; strengthening audit and enforcement procedures
through professional capacity building of FBR officials; ensuring more equitable & transparent application of tax
laws through provision of high quality tax services. By completing TARP in 2011 FBR has substantially achieved
the desired objectives despite various obstacles in the existing operational environment. The successful completion
of TARP rests upon Government's firm resolve to reform FBR's Tax Administration

In June, 2000 when GoP appointed a Task Force on Reforming the Tax Administration. This Task Force presented its
report in May, 2001 which was shared with stakeholders to include trade bodies, accounting institutes, tax bar
associations and donor agencies for framing an implementation strategy in the light of viable recommendations from
the concerned stakeholders.
Subsequently, on the request from the GoP for input on FBR's reform effort, an IMF Mission visited Pakistan in
August, 2001 which carried out in-depth discussions with various stakeholders including Ministry of Finance,
Establishment Division, Federal Public Service Commission and trade bodies. The Mission presented its draft report
in August, 2001 which was condensed with other similar studies to extend recommendations for a tax system having
simpler laws and efficient procedures for promoting self-assessment, reducing physical controls and creating
reliance on audit & risk assessment.
Consequent to these reports and discussions with various opinion makers FBR prepared a tax reform strategy, which
was approved by GoP in November, 2001. The reform strategy had three main planks (a) policy reforms, (b)
administrative reforms and (c) organizational reforms. Policy reforms included simple laws, universal selfassessment, elimination of exemptions, less dependence on withholding taxes, effective dispute resolution
mechanism. Administrative reforms aimed at (I) transforming income tax organization on functional lines (ii) reengineering of manual processes of all taxes with the aim to reduce face to face contact between taxpayers and tax
collectors, increasing effectiveness of FBR and improve skills and integrity of the workforce and facilitation of
taxpayers. Organizational reforms also included re-organization of FBR on functional lines, reduction in number of
tiers and reduction in workforce.
With a view to supplement the level of skills in FBR for meeting the above said objectives, the Government in
March-April, 2002 appointed professional Members from private sector for (i) Human Resource Management
(HRM), (ii) Information Management System (IMS), (iii) Audit, (iv), Facilitation and Taxpayers Education (FATE)
and (v) Fiscal Research & Statistics (FR&S). FBR prepared new recruitment policy (with greater emphasis on skills
that match FBR needs), incentive & merit based remuneration, promotion mechanism and extensive training.
In 2002, FBR received a Project Preparation Facility (PPF) of US $ 2.9 million from World Bank which was used
for hiring of international consultants, namely M/s Maxwell Stamp PLC, UK, and establishing Large Taxpayer Unit
& Model Sales Tax House at Karachi and a Medium Taxpayer Unit at Lahore. M/s. Maxwell Stamp prepared a
Comprehensive Medium and Long term Tax Reform Strategy including an implementation time-table defining the
precise reform steps and their time frame.
To bridge the financial gap between the PPF and the funding for main phase of Tax Administration Reform an
amount of US $ 6 million was also allocated out of World Bank funded "Public Sector Capacity Building Project"
which was later utilized for completion of Pilot Projects i.e. Large Taxpayers Unit at Lahore, 5-Medium Taxpayers
Units at Karachi, Peshawar, Rawalpindi, Quetta and Faisalabad and a Dispute Resolution Complex (DRC) & Model
Customs Collectorate at Karachi, capacity-building & training of FBR's employees, Taxpayers Education Programs,
introduction of Universal Self Assessment Scheme (USAS) and holding of Change Management Workshops. Part of
this funding was also utilized for appointment of M/s. NESPak Pakistan as Consultants for preparation of design
layouts, procurement support and supervision of works at sites for LTU Lahore, 5 MTUs at Karachi, Quetta,
Peshawar, Rawalpindi & Faisalabad, DRC and Care Pilot Project Karachi.
To achieve Reforms objectives, FBR established Large Taxpayer units (LTUs) and Regional Tax Offices (RTOs) to
test the re-organized structure of income tax & Sales Tax and various Taxpayers Education and Facilitation Centers
to improve voluntary compliance. Customs processes were also re-engineered by initiating Customs Administration
Reform (CARE) which aimed at minimizing the clearance time of goods and reducing the cost of doing business.

Re-engineered business processes were automated for e-filing of Income Tax returns and Goods Declarations,
followed by establishment of an FBR website for information dissemination and a helpline for taxpayers.
Executive Committee of the National Economic Council (ECNEC) in its meeting held on 25.02.2005 approved the
main phase of TARP with a capital cost of Rs. 9,501 million. Completion period of this main phase of TARP was
five years starting from 01.01.2005. During the World Bank Mid-Term Review Mission in August-September 2007,
the Bank reviewed the implementation progress of this project in detail and on the basis of slow utilization of funds
mainly due to problems in development of Information Technology Systems during first two and half years,
recommended restructuring of TARP budget for remaining life of the project on the basis of anticipated
expenditures. Accordingly, a detailed exercise was undertaken on the basis of which a revised PC-I with reduced
capital cost of Rs. 6,473 millions was prepared and submitted to the competent forum i.e. CDWP/ECNEC. Revised
PC-I was approved by the CDWP on 30.04.2009 and ECNEC on 20.08.2009.
TARP has so far gained Stakeholders respect through improved performance and creating business friendly
environment. Imbuing professionalism, integrity & responsiveness, and introduction of transparent simplified
procedures have reduced the cost of doing business. Moving towards optimum use of automation and IT,
professional training and better working conditions have further infused confidence among tax collectors who intend
to strive hard for increased taxpayers facilitation in the areas of Income Tax and Customs.
TARP has been closed by 31.12.2011 at a cost of Rs. 5,528 million against revised project cost of Rs. 6,472.817
million. All the physical progress has been achieved. i.e. (a) establishment of 57 RTOs, MCCs, TFCs & Transit
accommodations, (b) four soft wares i.e., Integrated Tax Management System (ITMS), Human resource Information
System (HRIS), SAP Materials Management (MM) & Financial (FI) Modules, & Data Warehouse software have
been completed and are functional (c) 11,445 machinery & equipment as per PC-I target were procured and
distributed. Tax revenue of Rs. 1,558 billion has been collected during 2010-11 against PC-I set target of Rs. 1,350
billion. TARP PMU, during this process, through professional training and hands-on exposure, has gained sufficient
professional capability to utilize the same for achieving any future project development objectives in terms of
project planning, procurement of works, Goods and services and subsequent monitoring & evaluation.