FBR Asks for World Bank’s Assistance in Tax Reforms

Pakistan is seeking assistance worth $400 million from the World Bank to bring reforms to its tax system.

The country’s Federal Board of Revenue (FBR) is in talks with the international lender in this regard. The talks are going on between the two institutions and an announcement is expected in the coming days.

As per the available sources, the talks include conditions to establish a constitutional body for the resolution of tax disputes between the provincial and central government. The negotiations also include a proposition to change the tax structure for the agriculture sector.


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Reportedly, the World Banks has also asked for common policies and administration for income and sales tax, which will end the coinciding policies of provincial and federal revenue authorities.

The World Bank also observed that Pakistan’s current tax to Gross Domestic Product (GDP) ration stands at 12.6 percent, way less than the ideal 23 percent of the GDP. It requires the FBR to switch from profit-based income tax to turnover taxation. It deems this step can bring down the tax evasion by the corporate sector by two-thirds.

If both sides come to an agreement, this will be the second full-scale attempt by the World Bank to reform the tax structure of the country in the past 14 years.