Government Weighs New Tax Agency Amid FBR Reform Push

The federal government is weighing the creation of a new tax collection agency or further restructuring the Federal Board of Revenue (FBR) amid concerns over its performance despite repeated reform efforts, The Express Tribune reported.

Prime Minister Shehbaz Sharif has instructed the FBR to submit comprehensive proposals on human resource reforms, organisational restructuring and institutional changes by October 19, according to directives issued by the Prime Minister's Office on Thursday.

Officials said the option of establishing a separate national tax agency was discussed at a high-level meeting last Saturday. Following the meeting, FBR Chairman Rashid Langrial directed officials to prepare proposals for submission to the prime minister.

However, the discussions are still at an early stage, and no final decision has been made regarding the creation of a new organisation or changes to the FBR's current structure.

Citing the FBR, The Express Tribune reported that the board was preparing reform proposals in accordance with the prime minister's instructions, but no policy had been finalised. The FBR said the government's priority remained improving the existing tax administration through changes in staffing, technology and operational procedures.

The board also dismissed suggestions that tax revenue collection would be outsourced to a private company.

According to officials familiar with the discussions, one proposal would allow the FBR to continue operating alongside a newly established tax agency. Employees who choose not to transfer to the new organisation would remain in their existing positions until retirement.

Creating a separate agency with powers currently held by the FBR would require legislative amendments, including changes to the FBR Act 2007 and several tax laws.

The latest deliberations follow repeated restructuring efforts dating back to 2000. These include the transformation of the Central Board of Revenue into the FBR, changes to service cadres and a transformation programme worth more than Rs55 billion launched in 2024.

A separate proposal put forward during the caretaker government's tenure had also called for separating Customs and Inland Revenue functions.

The renewed debate over reform comes amid persistent concerns about Pakistan's limited tax base and the performance of revenue collection.

The FBR's tax-to-GDP ratio stood at 10.3% in the previous fiscal year, while tax receipts fell more than Rs1.1 trillion below the original annual target. For the current fiscal year, the government has established a collection target of Rs15.263 trillion, requiring revenue growth of more than 17%.

Prime Minister Shehbaz Sharif is expected to review the FBR's restructuring proposals on October 19 before deciding on any further changes to the country's tax administration system.