- Govt places FBR’s policy wing under Ministry of Finance.
- Process to take few months; become operational from next FY.
- Tax Policy Office to support analysis of tax policies, proposals.
ISLAMABAD: In its bid to comply with International Monetary Fund’s (IMF) terms, the federal cabinet has cabinet has approved separation of the Tax Policy Office from the Federal Board of Revenue (FBR), The News reported on Saturday.
The government has separated FBR’s policy wing from the operations agreed with the IMF and placed it in the Ministry of Finance.
However, this process will take a few months so the placement of Policy Wing in the Ministry of Finance could become operational from the next Fiscal Year 2025-26.
The development comes against the backdrop of a substantial tax shortfall of Rs386 billion during the first half of the current Fiscal Year (July-December).
Total revenue collection amounted to Rs5,623 billion, falling short of the target of Rs6,009 billion.
The International Monetary Fund (IMF) had set an indicative target of Rs6,009 billion for the period ending December 2024. However, the FBR’s net collection reached only Rs5,623 billion over the first six-month period the current fiscal year (CFY).
Meanwhile, the Ministry of Finance has already issued a notification in this regard earlier this week following the cabinet’s approval.
As per the Tax Policy Office will lend support to the analysis of tax policies and proposals through data modelling, revenue and economic forecasting as well as the country’s international tax treaties and obligations.
The Tax Policy Office will report directly to the Minister for Finance. The staffing to the said office as approved by the federal cabinet, shall be undertaken with the approval of Establishment Division and Finance Division as per terms and conditions prescribed by the government.
The responsibilities and structure of the TPO may be amended as deemed necessary for its optimal functioning with the approval of the federal cabinet.
Finance Minister Muhammad Aurangzeb has conveyed to business community that the government has decided to move the tax policy unit out of the FBR and house it within the Ministry of Finance for tax policy budget preparations.
