ISLAMABAD, Sept 30: The World Bank will provide technical assistance to Pakistan in reforming the taxation policies for achieving a quantum jump in tax-to-GDP ratio, which is the lowest in the region.
Khawaja Tanweer Ahmad, Member Tax Policy Reform, told Dawn on Friday that the Central Board of Revenue had asked the World Bank mission for assistance in carrying out a detailed tax policies reform on a successful model adopted by any developed or developing country, particularly in the region.
The 14-member World Bank mission on Friday concluded the extensive review of key areas of the Pakistan Tax Administration Reform Project (TARP) and expressed satisfaction over the development achieved so far in these areas.
The member said that it was agreed that both the CBR and the finance ministry would work for arresting the constant decline in the tax-to-GDP ratio, particularly in income tax and sales tax and enhancing it to a level of other countries of the region.
Mr Ahmad said that a long-term strategy would be adopted in this regard in consultation with the experts to be provided by the World Bank. He said the mission had shown satisfaction over the rolling out of the establishment of regional tax offices (RTOs) and development of the CARS project. However, he said that the bank had asked for early addressing of the human resource management issues.
The World Bank officials also asked for a detailed communication strategy so as to develop an effective linkage of tax officials with stakeholders — taxpayers. The bank would provide technical assistance in creating awareness among the stakeholders about the reform process, he added.
For expanding the tax base, the member said, the bank officials had asked for adopting an effective strategy, as they observed that the current system did not help much in this regard.
The mission also offered technical assistance in the development of an effective audit policy for all the three taxes — sales tax, income tax and customs.
Mr Ahmed said the World Bank team during 10 days of stay in Pakistan reviewed key areas of reforms in the administration of income tax, sales tax and central excise. They also assessed changes implemented towards taxpayers’ identification, registration and audit and their impact on broadening the tax base and revenues.
They visited customs sites in Karachi, Lahore and Sost for the extension of ‘benchmark’ study earlier carried out at the KICT for establishing a national baseline.