The material violations detected from customs inspections and audits decreased from 8 percent in 2021-22 to 7 percent in 2022-23 through goods declarations (GDs) inspections and post-clearance audits.
The Bank in the ‘implementation status and results report’ of the Pakistan Raises Revenue project noted that the violations detected against GDs which were cleared under Red and Yellow channels, were 0.3 percent in 2020-21, to 0.4 percent in 2021-22, and 0.3 percent in 2022-23. The post-clearance audit detected 16 percent violations in 2020-21 and 2021-22 and 14 percent in 2022-23.
The Bank has rated the overall implementation progress of the project worth $400 million moderately satisfactory. The objective of the project was to contribute to a sustainable increase in domestic revenue by broadening the tax base and facilitating compliance.
The Bank stated that the firm is being hired for the consolidation of frameworks for the Central Risk Management System (CRMS) and Post Clearance Audit (PCA) through comprehensive BPM/BPR of core business processes.
The Federal Board of Revenue (FBR) has completed 53 field audits of large taxpayers and big entities selected by the risk-based selection tools during 2022-2023. During 2022-23, the FBR completed 53 field audits of large taxpayer units monitored by the Compliance Unit through the Audit Management Information System.
The report said that overall satisfactory progress is noted towards the achievement of project development objectives and implementation of the results-based component of the project. There is improved performance in several Disbursement Linked Indicators (DLIs).
The withholding tax lines have been reduced from 58 in 2019-20 to 33 in 2021-22. The detailed tax expenditure and evidence-based revenue forecast reports have been published in 2022-23, while a tax gap analysis report was published last year.
The report said that all four provinces have signed MOUs for data sharing with the Federal Board of Revenue (FBR), as well as MOUs for input adjustments in sales tax, and have adopted FBR’s valuation tables for immovable properties.
FBR has added around 616,000 new taxpayers, identified through automated data sharing, ICT-based business Intelligence tools, surveys, and other enforcement methods. Cumulatively, 1.079 million taxpayers were added during the past four years. The single returns portal is planned to be piloted with the Punjab Revenue Authority (PRA) in 2023, the report said.
The functionality of the system has been tested with the telecom sector and PRA. Customs processing has improved with the reduction in the frequency of physical inspections at the border – from a baseline of 60 percent of goods declared through the red and yellow channels in 2019-20 to 33.42 percent in 2022-23.
The report said that the simplification of FBR’s core business processes has surpassed its target. FBR has completed the review, redesign, or simplification and automation of 5 additional business processes of tax administration in FY23 (cumulatively, 17 against the target of 15 business processes).
Finally, the FBR has continued to track the Key Performance Indicators and published the bi-annual results report for fiscal year 2022-23 on its website. The annual report for fiscal year 2022-23 is being finalized.
The implementation progress of component 2 is moderately satisfactory. Some key procurements are underway, including the preparation of a site for the data center and equipment for the Automated Entry Exit Systems (AEES) for airports; launching the procurement process for AEES equipment for airports; while the procurement process for the equipment for seaports will be launched soon.
The hiring of consultants is also under process for the Central Risk Management System and Post Clearance Audit through comprehensive Business Process Mapping and Reengineering of core business processes. The specifications for other major procurements related to the upgradation of data centers or data warehouses are being designed, which will inform the procurement process for the same, the report added.