The federal government is considering introducing enabling provisions in the Finance Bill for 2026-27 to facilitate the implementation of the Federal Board of Revenue’s proposed three wing operating model, a key component of its broader effort to modernize tax administration and reduce the country’s massive tax compliance gap.
According to official sources, the proposed amendments would support the transition of Inland Revenue operations into separate audit, assessment, and enforcement functions from the next fiscal year. The restructuring forms part of the FBR’s wider reform agenda, which is based on the OECD’s digital and data driven tax administration framework and is aimed at improving transparency, accountability, and tax collection.
Under the proposed structure, the National Faceless Audit Wing will become a centralized and fully digital unit responsible for conducting risk based audits and monitoring withholding and advance tax compliance through the Central Data Hub. The wing will generate audit findings through desk based and detailed reviews while operating independently from assessment and enforcement functions.
The National Assessment Wing will exercise quasi judicial authority by issuing assessment orders, show cause notices, refund approvals, and exemption decisions. Separately, the Field Operations Wing will serve as the enforcement arm, carrying out recoveries, taxpayer registration, tax base expansion, prosecutions, and field verifications. Officials say the separation of responsibilities is intended to eliminate conflicts of interest and reduce direct interaction between taxpayers and officers.
As part of the transition, existing audit and assessment functions within field formations will be shifted to the new audit and assessment wings, while officers will be redeployed through a merit based process.
Regional Taxpayer Offices will be reorganized as territorial units under the Field Operations Wing, and Refund Commissionerates will be merged into a dedicated refund processing unit within the National Assessment Wing.
The proposal also includes higher grades and specialization allowances for officers in the audit and assessment wings, recovery linked incentives for field officers, and institutional protections against premature transfers through the Independent Officer Review Committee.
Officials noted that a similar separation of functions was previously introduced under the World Bank funded Tax Administration Reform Program but was later abandoned.
While questions remain about coordination among the three wings and the risk of administrative bottlenecks, FBR officials argue that the latest framework has been developed through a home grown approach and can succeed if Inland Revenue Service officers take ownership of the reform process and support its implementation.
