ISLAMABAD: The Federal Board of Revenue (FBR) aims to strengthen and upgrade its data network under a five-year strategic plan that will shift the organisation towards the use of analytic and business intelligence and help increase revenue collection.

The $4.9 million project, titled ‘Change Management Programme’, will be financed by the UK Department for International Development (DFID) and World Bank partnership for Education Development.

FBR will implement the project which is expected to be approved by the bank in the coming weeks.

The programme details a general strategy to consolidate 100 per cent electronic transactions in a paperless organisation to increase the effectiveness of the tax collection system.

The existing FBR infrastructure – established with the last ‘Tax Administrative Reform Project’ (TARP) financed by the World Bank completed in 2010 – is outdated and unable to fulfill emerging demands.

The new system will help generate the required information for policy analysis since fiscal research and tax policy analysis are powerful instruments that will help in forming the policies to increase fiscal space and provide for a more effective, efficient and equitable tax system.

The major outcome of the project will be setting up of Tax Intelligence Unit and Market Monitoring Unit with the objective to support policy-makers to make informed decisions to mobilise domestic revenues.

The new Data Centre will allow the use of specialised tools for centralised monitoring and data management.

By doing cross-data analysis and intelligent reporting, FBR will be able to identify opportunities to close the gap of non-compliers, and deploy collection methods and effective risk-based audit analysis. This effective data mining would help FBR to analyse data of thousands of taxpayers and identify common attributes and trends.

A Multi-Donor Trust Fund for Accelerating Growth and Reforms (TAGR) is in place to support the government’ s economic reform programme by filling knowledge gaps and strengthening the capacity of key institutions to design and implement the overall reform agenda.

The revenue mobilisation pillar of TAGR adopts a holistic approach to resource mobilisation and includes tax policy reforms and tax administration modernisation efforts. This component envisages a series of analytical and advisory activities and places great emphasis on the modernisation of IT systems.

From a very low baseline, revenue mobilisation has substantially increased during the first year of TAGR programme implementation supported by strong commitment from the authorities. Tax-to-GDP ratio has steadily risen from the 2013-14 baselines of 10.5 per cent of GDP to 12.4pc in 2015-16. While this progress is encouraging, Pakistan’s tax capacity is estimated at 22.3pc of the GDP.

The TAGR was built on lessons learned from the ‘Tax Administrative Reform’ project (TARP) carried out during 2005-11. The success of the TARP project was limited by inadequate technical assistance, a limited local presence, and low prioritisation of tax policy reforms.

Published in Dawn February 5th, 2017