The Federal Board of Revenue (FBR) has unveiled a comprehensive transformation plan aimed at increasing Pakistan’s tax-to-GDP ratio from its current 10.24% to 18% in the medium term. This plan, which was approved by the prime minister in October 2024, was presented to business leaders in a recent briefing.
Key features of the plan include:
- Target Breakdown: The FBR’s contribution is projected to rise to 14%, with an additional 3% from provincial revenues and 1% from the petroleum levy, totaling the 18% target.
- Focus on Technology and Digitization: The FBR aims to close a significant tax gap by leveraging technology and improving its processes. This includes the digitalization of key sectors and using AI-driven risk parameters for audits.
- Human Resource Enhancement: The institution is enhancing its capacity by hiring approximately 1,600 new auditors and providing training to newly inducted officers at top universities to align with modern corporate standards.
- Performance-Based Incentives: Appointments are being made based on integrity, with officers’ performance evaluated through a reward and rating system that includes performance-based incentive packages.
- Early Success: The reforms have already shown positive results, with the FBR’s tax-to-GDP ratio increasing from 8.8% in 2023-24 to 10.24% in 2024-25. Initiatives like the “Faceless Customs Appraisement” have led to a 17.3% increase in revenue per GD.
- Taxpayer Facilitation: A new facilitation division has been established at Karachi LTO, where senior officers will personally address taxpayers’ concerns. The FBR has also proposed a joint committee with business leaders to resolve issues.
