One of the major objective of the on-going reform
program of the Central Board of Revenue (CBR) is to increase the
number of tax payers and check the massive tax evasion.
Finance Minister Shaukat Aziz while talking to the
newsmen in Islamabad last week, disclosed that a tracker system was
being introduced to increase the number of tax payer from present 1.7
to 2 million to 3 million within next 2 years. Tax consultant to the
CBR has recommended to set up a National Intelligence Division (NID)
in the CBR to identify cases of massive tax evasion by tracking down
the taxevaders. The proposed NID and Customs Tax Fraud Department
would work separately, the former identifying the cases and the latter
conducting investigation to combat institutionalized tax evasion.
Under the plan, NID would be empowered to collect information from
various intelligence sources, including domestic/foreign informers,
agencies police, road/rail and air transportation firms.
Essentially, NID would work along with the Risk
Management Unit (RMU) encompassing Customs, Excise, Export, Direct
Taxes and Sales Tax, but staying away from investigation. The cases
detected by it would be investigated by the proposed Customs Tax Fraud
Division. So far as RMU is concerned, it would analyze the overall
business environment and performance of individual taxpayers and
report accordingly, thereby helping ensure availability of
statistically dependable information for auditing.
The government seems to be determined to carry out
the major restructuring of Central Board of Revenue (CBR) and
implement the reform programme to make it more efficient, effective
and corruption free organization as suggested by various committees of
exports both national and international. To achieve its objective, the
government has agreed to set up a high level watchdog body (Revenue
Reforms Commission) to effectively monitor/evaluate the performance of
the CBR and ensure timely implementation of tax administration reforms
by meeting revenue target and fulfilling World Bank conditionate.
The constitution of such a body has been considered
necessary for implementing the reforms agenda devised by experts
committee including donor agencies. The proposed commission will have
the authority to negotiate with international donors like World Bank
on all issues pertaining to the CBR who have undertaken to finance the
Under the reform programme being financed by the
World Bank grant of $150 million, the CBR will be completely
restructured. Under the new structure, member customs would be
directly linked with the DG export and DG import member sales tax, DG
sales tax and DG LTU, member direct taxes, DG direct taxes and DG LTU.
Member revenue services would work with the DG
intelligence, DG taxpayer education and facilitation, DG risk
management, DG investigation, DG collection and enforcement and DG
taxpayer audit. Member management services would deal with the DG
facility management, DG legal, DG human resources management, DG
information management system (IMS) and DG training and development.
Member policy and tax reforms would coordinate with
the DG project coordination and DG fiscal research and statistics.
Member internal audit would work with the DG internal affairs. The
sources also said that the first milestone was evolving top level
structure of seven streams reporting to the chairman i.e. customs,
revenue services, direct tax, management services sales tax, policy
and reforms and internal audit.
Al later stage, it was envisaged that the three
revenue streams would report through a single channel, i.e. member
revenue operation thereby, reducing the chairman's direct reports to
the five members. Specialist revenue functions such as intelligence,
taxpayer, education, taxpayer audit, etc. are brought together under a
revenue services members while the administrative and management
support functions such as IT, human resource, facilities management,
etc., are combined into a management services stream.
Furthermore, the CBR will set up regional hubs for
the following functional areas to provide technical assistance to the
line administrations across all tax administrations and ensure quality
assurance of the policies and procedures developed by the central
office of the same functional organization.
Revenue services include intelligence and
investigation, taxpayer education and facilitation, and enforcement,
registration, return processing and accounts and audit function.
Management services include facility management, human resources
management, legal training and development and information management
system and support.
In the short and medium term, whether reporting to
the chairman directly, or through member revenue operations, the sales
and direct tax stream will remain separate. However, a programme of
co-location had already begun and would be continued through the
establishment of addition Large Taxpayer Unit (LTU).