ISLAMABAD: The World Bank (WB) has linked the $400 million loan for the Pakistan Rises Revenue (PRR) project to result-based annual target, saying once the results are attained, the government and the Federal Board of Revenue (FBR) will get the funds.
This has been revealed in a progress report 2020 published by the Platform for Collaboration on Tax (PCT) - a joint initiative of the IMF, the OECD, the UN, and the World Bank.
The report gives a snapshot of the world's four leading multilateral organisations' cooperation in the area of domestic resource mobilisation, including in their responses to the Covid-19.
The report stated that the government of Pakistan developed a Medium-Term Revenue Strategy (MTRS) with close support from the WB.
Drawing on comprehensive WB analytical work funded by the DFID, the WB organised a number of workshops to help the FBR develop a tax reform strategy that aims to address challenges with tax policy design, coordination between different levels of government, a narrow tax base, complexities in the tax system, compliance rates, the informal sector, and revenue administration efficiency.
Since the last annual report, the MTRS has evidenced two important milestones in the last year.
First, the World Bank has approved a large loan, the PRR, to support the FBR with $400 million.
The PRR objective is to contribute to a sustainable increase in domestic revenue by broadening the tax base and facilitating compliance.
The loan is results based with annual targets.
Once the results are attained the government and the FBR will get the funds.
The results are linked to improvements of the tax policy, for instance the harmonisation of the sales tax between the federal and provincial governments as well as administrative measures such as risk-based audits.
Most of the first-year targets are in good course despite the Covid-19 crisis.
Second, the Inland Revenue Service (IRS) has completed the first draft of its five-year strategic plan, which, along with the already approved five-year strategic plan for the Customs Service, will constitute the FBR medium- to long-term vision and mission.
The WB will continue assisting the FBR to consolidate the MTRS providing technical advice in the tax policy and tax administration, including customs fields.
Copyright Business Recorder, 2020
Comments
Comments are closed.