The CBR has recommended to set up a National Intelligence Division (NID) in the CBR to identify cases of massive tax evasion


Sep 08 - 14, 2003

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 reforms programme.

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).