ISLAMABAD: After a delay of over two years, Finance Minister Dr Hafeez Shaikh on Thursday approved the establishment of the Tax Policy Unit in the Ministry of Finance to take away policy formation powers from the Federal Board of Revenue (FBR).

The decision was taken in the fifth meeting of the FBR Policy Board chaired by Mr Hafeez. It was also attended by Minister for Privatisation Mohammadmian Soomro, Commerce Adviser Abdul Razak Dawood, Adviser on Institutional Reforms Dr Ishrat Husain and Special Assistant on Revenue Dr Waqar Masood.

Prime Minister Imran Khan had approved the plan in the cabinet meeting held on Nov 29, 2018, but the tax bureaucrats took a lot of time to separate tax policy from the tax administration.

In November 2019, the Federal Cabinet took away the powers of making tariff changes from the Customs Department and placed it under the administrative control of the commerce ministry. A tariff policy centre was already established in the commerce ministry to deal with tariff changes.

The delay was seen in implementing the decision on the Inland Revenue (IR) — income tax, sales tax and federal excise duty. Now as per the decision, the tax policy unit will be established under the administrative control of the Finance Division.

It is also unclear whether the FBR will abolish the posts of member policy customs and IR as their functions have now been shifted to the Finance Division and Commerce Division. An official announcement issued after the meeting said that a new setup would be created that will include members from FBR and also engage fiscal and economic experts from academia, think tanks and private sector to present holistic proposals for mobilising revenue generation with greater autonomy.

The Tax Policy Unit would work out policy recommendations for domestic tax collection on the lines of the Tariff Policy Board, dealing with customs policy issues and operates under the Ministry of Commerce.

The members of the FBR Policy Board gave input highlighting the advantages of keeping tax policy function independent of an administrative function.

The FBR’s Technical Committee apprised the Policy Board about the measures taken to identify anomalies and simplify the taxation system for a better understanding of the business community. The FBR requested to include senior representatives from the Ministry of Commerce and Ministry of Industries & Production for better coordination and effective policymaking in this regard.

The chairman Complaint Oversight Committee (COC) briefed the Policy Board about the working of a newly developed complaint portal which is currently running on a trial basis. The complaint resolution system is designed to facilitate businessmen, traders, small and medium enterprises (SMEs) and large taxpayers. All complaints can be filed in one place. SOPs for complaint resolution and oversight by COC are being finalised and the system would be formally launched soon.

Mr Hafeez directed to disseminate relevant information about the working of complaint registration mechanism and ensure the contact details are readily available for public consumption.

Published in Dawn, February 12th, 2021