Digitisation for Clean Taxation

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Asad Tahir Jappa

To achieve the goal of documentation of the economy and to bring more transparency in the economic transactions, documentation of the flow of foreign currency in and out of the country is pivotal

The Federal Board of Revenue (FBR) has truly become a happening place and with every passing day, it is going from strength to strength. It has successfully maintained the momentum of its growth trajectory in revenue collection. The country’s premier revenue collection organization has released the provisional revenue collection figures for the months July 2021 to January 2022 of the current Financial Year 2021-22. According to the provisional information, the country’s single largest revenue organization has collected net revenue of Rs 3,352 billion from July, 221 to January 2022 of the current Financial Year 2021-22, which has exceeded the target of Rs 3,090 billion by Rs 262 billion. This represents a growth of about 30.4 percent over the collection of Rs 2,571 billion during the same period, last year.
The net collection for January 2022 realized Rs 430 billion representing an increase of 17.2 percent over Rs 367 billion collected in January 2021. These figures would further improve before the close of the day and after book adjustments have been taken into account. On the other hand, the gross collections increased from Rs 2,705 billion from July 2021 to January 2022 to Rs 3,533 billion in the current Financial Year July 2021 to January 2022, showing an increase of 30.6 percent Likewise, the number of refunds disbursed was Rs 182 billion from July 2021 to January 2022 compared to Rs 134 billion paid last year, showing an increase of 35.9 percent.
It is pertinent to mention that FBR has introduced several innovative interventions both at the policy and operational level to maximize revenue potential through digitization, transparency, and taxpayers’ facilitation. It is fast-tracking its journey to embrace digitization and automation. This has not only resulted in ensuring the ease of doing business but also translated into healthy and steady growth in revenue collection. Likewise, the incumbent top leadership of FBR has launched a new culture of clean taxation with a clear focus on collecting only the fair tax and not holding up refunds that are due to be paid. This has not only fast-tracked the process of bridging the trust deficit between FBR and Taxpayers but also ensured the much-needed cash liquidity for the business community. That’s precisely why, for the first time in the country’s history, FBR continues to surpass its assigned revenue targets despite challenges and price stabilization measures adopted by the government.
Achieving yet another significant milestone towards automation and data integration to facilitate the taxpayers and the passengers flying in and out of the country, FBR has launched the Automated Currency Declaration System (ACDS). Federal Minister for Finance & Revenue, Shaukat Fayaz Ahmed Tarin, presided over the launching ceremony held last week at FBR (HQs), Islamabad as the Chief Guest. Speaking to the august gathering comprising of all FBR Members, dignitaries, senior officers, and media representatives, Finance Minister congratulated Chairman FBR and his team for making this long-awaited initiative possible in a short period. He resolved that Government was focusing on the documentation of the economy with maximum facilitation. “This aim can only be achieved through the use of technology and automation with a review of existing procedures and processes,” he remarked. It goes beyond saying that inter-agency coordination and cooperation is a sine qua non for the success of all efforts of business process reengineering and adoption of a new framework for implementation of rules & regulation. To achieve the goal of documentation of the economy and to bring more transparency in the economic transactions, documentation of the flow of foreign currency in and out of the country is pivotal. Presently, Currency Declarations (CDs) are obtained randomly from the passengers coming or going out from the country through Airports. Currency Declarations are manually secured in the shape of hard Copies and these hard copies are then entered into the System manually in batches. For millions of passengers coming in and going out of the country, it is an uphill task especially with very few resources in comparison with the challenges faced by Pakistan Customs and other Law Enforcement Agencies (LEAs). Since the current System of Currency Declarations was not working to achieve the goal of complete documentation of foreign currency movement, a new System was envisaged by FBR.
This new system was developed with the assistance of NADRA and FIA and will now be deployed at all international Airports, starting from Islamabad International Airport. This system will be a hassle-free and time-saving, one-stop solution for all incoming and outgoing passenger Rs FBR is also working on securing data from banks and the State Bank of Pakistan along with the integration of Currency exchange Companies with POS. This will culminate into greater visibility and capturing information which could then be used for analysis or audit purposes. The data captured through POS and CDS will then be shared with all relevant agencies including SBP, FIA, Customs, IRS, etc. for further necessary action as per law. This end-to-end visibility of the foreign currency market will bring a semblance of stability in the market and will also be instrumental in countering money laundering and other related crimes in the country. This innovation initiative has come about at a critical juncture when Pakistan was making all-out efforts to fight the menace of money laundering and currency smuggling while putting in every endeavor to comply with FATF regulations. Therefore, this digital intervention was by no means a small success. All three government organizations FBR, FIA, and NADRA deserve appreciation for working in unison and kick-starting this significant step.
It is positively hoped that FBR will continue to strive to maximize automation and digitization to promote transparency and reliability in tax collection. Certainly, the Automated Currency Declaration System (ACDS) would save time and ensure credibility as it will capture Currency Declaration data not only at Airports but also at border stations where immigration desks were available and IBMS (Integrated Border Management System) of FIA was working. Furthermore, the information captured through the new system will also be shared with other concerned agencies/departments like NADRA, SBP, and IRS for taking further action as and when required. The integration of IBMS and FBR’s WeBOC system for the endeavor in active technical cooperation of NADRA was indeed the start of a new phase of collaboration among these very important agencies of the government. Undoubtedly, this synergetic approach would pave the way for more such initiatives in the future and thus together these agencies will maximize tax compliance through digital interventions and data integration.
As FBR is chasing a staggering revenue target of nearly around 6 Trillion for the current financial year, it is leaving no stone unturned to promote a culture of tax compliance in Pakistan through the effective use of technology, data sharing, artificial intelligence, mathematical modeling, and third party information based on definite evidence. Thus, FBR is ushering in a new era of clean taxation that is fair, just, and reliable. This is certainly going to transform the entire economic landscape of the country. The sooner it happens, the better.