Tax Administration Reforms Programme
Tax Administration Reforms Programme:
Pakistan’s fiscal crisis is deep and not easily resolvable. Tax receipts are insufficient to pay even for debt service and defence and there is hardly any net foreign assistance for development. Simultaneously, there is a crisis of confidence between the taxpayer and the government. If taxes relative to the GDP do not increase significantly, without new levies, Pakistan can not be governed effectively, essential public services can not be delivered, and high inflation can not be avoided. The reform of tax administration is the single most important economic task for the government.
Consequently, the Government of Pakistan has started a tax Administration Reforms Programme. The basic objective of the programme is to develop modern, integrated, effective and efficient tax system in Pakistan which promotes mutual trust and satisfaction both for the tax payers and the tax collectors.
The divisional structure of taxation system has been converted into functional structure. For example: Large Taxpayers Units (LTU) has been established at Karachi, Lahore and Islamabad.
Furthermore, in other big cities, Medium Taxpayer Units have also been established. Ultimately, it is planned that all Medium Taxpayers Units shall be converted into Regional Tax Offices (RTO). Fourteen Regional Tax Offices shall be responsible for collection of all domestic taxes. For example: Income tax, sales tax and excise etc.
Under Tax Administration Reforms Programme twenty three taxpayers facilitation centers have been opened whereas 29 more such centres are planned to be started.
To implement such Tax Administration Reforms Programme, the Government has transformed the Central Board of Revenue (CBR) into the Federal Board of Revenue Act, 2007. Almost, all powers and functions of the CBR have been vested to the FBR. The FBR shall consist of at least seven members. These members shall be appointed by the FBR. The head of the FBR is called Chairman who is appointed by the Federal Government.
Major objectives of such tax administration reforms programme are the followings:
1) To provide quality service to each employee.
2) To increase productivity by providing quality work environment and adequate compensation to all employees.
3) To improve voluntary compliance by taxpayers through efficient and organized management.
4) To bring cultural, operational and structural changes in the taxation structure of Pakistan.
Scope of Income Tax Law:
1) The territorial limits to which the Income Tax Ordinance, 2001 applies.
2) The components of the Income Tax Law in Pakistan.
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