FBR, Customs will be restructured, says Shamshad

ISLAMABAD: The government, under the stewardship of caretaker Finance Minister Dr. Shamshad Akhtar, has declared its intention to institute reforms in the Federal Board of Revenue (FBR), with a key change involving the separation of customs from the revenue collection process.

This move is designed to address perceived conflicts of interest and underscores the government’s commitment to improving transparency and efficiency in revenue collection.

During the second day of the Future Summit, Dr. Akhtar specified that the customs department’s revised role will concentrate on “tracking” smuggling, while the FBR will retain its primary responsibility for revenue collection.

The customs department, currently integrated into the FBR, manages tax collection on international trade and endeavors to prevent the illicit movement of goods across borders.

Despite contributing less than 15 percent to the FBR’s overall tax collection, encompassing income tax, sales tax, and federal excise duties, the functions of the customs department will be redefined as part of the restructuring initiative.

Dr. Akhtar underscored that this adjustment is a pivotal step in the broader restructuring of the FBR, with an official notification expected next week.

She also indicated that subsequent notifications detailing further measures for FBR restructuring will be issued.

In addition to the separation of customs, the government is actively pursuing the segregation of tax policy and revenue division within the FBR. This strategic move aims to eliminate perceived conflicts of interest in tax collection, illustrating a commitment to augment transparency and efficiency in the revenue collection process.

Addressing concerns related to the National Finance Commission (NFC) award, Dr. Akhtar expressed reservations similar to her predecessors in the finance ministry.

She criticized the rapid devolution of subjects and the disproportionate transfer of government revenues from the center to the provinces more than a decade ago through the NFC award.

Acknowledging the challenges of reversing such decisions in a political context, she highlighted ongoing efforts by the federal government to collaborate with the provinces in transferring provincial components of expenditure back to their respective regions.