In a recent development, the World Bank has released a report drawing attention to significant data analysis challenges faced by Pakistan’s Federal Board of Revenue (FBR), impacting effective tax compliance measures.
The report underscores the crucial role of data collection and analysis from various sources, including provincial tax authorities, governmental entities, foreign jurisdictions, and withholding agents, in contemporary revenue administration. However, the FBR currently lacks the capability and access needed for efficient handling of large-scale data analysis, resulting in limitations in identifying tax evasion cases.
To address this issue, the FBR requires modern information and communication technology (ICT) infrastructure and technical expertise. Investment in ICT is essential for streamlining and automating business processes, enabling paperless administration, real-time communication with FBR field offices, and enhanced e-services for taxpayers.
In response to these challenges, the FBR has initiated the Pakistan Raises Revenue Project (PRRP), a strategic effort aimed at expanding the tax base and facilitating compliance to boost domestic revenue. As part of the project, outdated equipment in FBR offices will be replaced to ensure seamless taxpayer services.
The PRRP will not entail any significant construction projects, land acquisition, or operations in indigenous or protected areas during its implementation period. The project’s environmental risk is considered moderate, mainly due to considerations related to managing e-waste.
The PRRP is structured around two key components. The first component focuses on simplifying the tax administration framework, providing clarity for taxpayers and tax administration professionals. It also aims to promote post-clearance audits (PCA) and risk-based inspections in Customs, enhance e-services for taxpayers and traders, and strengthen FBR’s institutional development for improved effectiveness and accountability.
Under the second component, outdated Information and Computer Technology (ICT) equipment in FBR offices across Pakistan will be replaced and upgraded. This intervention will involve establishing a high-capacity data warehouse to facilitate big data analysis and database integration. Additionally, computers, printers, copiers, scanners, networking equipment, and vehicle/container scanners at ports will be upgraded to enhance trade facilitation and taxpayer services.
The report emphasizes the significance of leveraging modern technologies and risk-based approaches for enhanced compliance control. Improving data analysis capabilities will enable the FBR to target tax evasion more effectively, contributing to a simpler and reinforced tax and customs administration in Pakistan. The World Bank’s support in upgrading ICT infrastructure is expected to play a crucial role in achieving these objectives.
