Islamabad:
Pakistan struck a deal on Friday to use the resources of the Bill and Melinda Gates Foundation to improve the poor efficiency of the Federal Board of Revenue (FBR), aiming to strengthen an extremely narrow tax base and low collection.
A Memorandum of Understanding (MoU) was signed by representatives of the FBR and Karandaaz Pakistan – an entity funded by the UK Foreign, Commonwealth and Development office and the Bill and Melinda Gates Foundation.
Karandaaz Pakistan CEO Wakasul Hasan also met Finance Minister Muhammad Aurangzeb before signing the agreement. Aurangzeb has vowed to fully digitize the FBR, aiming to end corruption and leakages.
Using financial resources from the Gates foundation, Karandaaz Pakistan will hire a consulting firm to assess the business needs, existing IT infrastructure, systems, business processes, all existing available information and assessment reports to define the framework and the scope of work to digitize Pakistan’s tax system.
Under the directives of Prime Minister Shehbaz Sharif, Karandaaz Pakistan pledged to revolutionize the antiquated tax system. The decision to involve Karandaaz Pakistan highlights that the World Bank’s $400 million Pakistan Raises Income and Asian Development Bank’s $300 million domestic resource mobilization programs have not yielded the desired results.
Pakistan’s tax-to-GDP ratio hovers around 9%, while less than 3.4 million people are active tax payers – two numbers that speak volumes for the ineffectiveness of the FBR and the failed attempts to restructure the tax machinery in the past.
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According to the MoU, FBR will provide any existing assessment reports and studies, tax reform agenda, vision, guidance, data, support and related decision-making to Karandaaz to help the entity provide technical assistance. However, FBR will not provide the personal details of citizens.
FBR will also provide all such data which help in demonstrating the impact of technical assistance and may be useful for the purpose of improving the quality of performance for stakeholders.
The agreement has been signed for a period of two years and can be extended further.
Karandaaz Pakistan will hire a consulting firm that has a proven track record of developing comprehensive digital strategies and implementation programs for large public sector organizations, comparable to a tax regulator in particular.
The consultancy will also have proven expertise in business process assessment, improvement and redesign, including experience in data management, structure, analysis and governance.
The consultancy will prepare a digital and IT transformation strategy and develop an implementation plan. It will also be required to mobilize the implementation of the devised program to support the procurement of the new IT systems, the costing of the systems and the provision of advice on identifying the most suitable suppliers.
The consultancy will also design the change management strategy related to the digitization initiatives.
Karandaaz, in consultation with and in consultation with the Gates Foundation, will work with the FBR to provide financial and technical assistance, support, project delivery and services as may be required by the FBR to digitize the tax system.
A Donor Coordination Committee will be established to share information and resources that could be leveraged to achieve the desired results without duplication of effort and consumption of resources.
Published in The Express Tribune, March 16u2024.
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