Pakistan entered into an agreement on Friday to utilise the resources of the Bill and Melinda Gates Foundation to improve the poor efficiency of the Federal Board of Revenue (FBR), aimed at enhancing 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 sponsored by the UK’s Foreign, Commonwealth and Development office and the Bill and Melinda Gates Foundation.
The CEO of Karandaaz Pakistan, Waqasul Hasan, also met with Finance Minister Muhammad Aurangzeb before the signing of the agreement. Aurangzeb has vowed to completely digitise FBR, aimed at ending corruption and leakages.
By 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 establish the context and scope of work for digitalising the tax system of Pakistan.
On the instructions of Prime Minister Shehbaz Sharif, Karandaaz Pakistan was engaged to revolutionise the obsolete tax system. The decision to involve Karandaaz Pakistan underscores that the World Bank’s $400 million Pakistan Raises Revenue and the Asian Development Bank’s $300 million Domestic Resource Mobilisation programmes have failed to yield the desired results.
Pakistan’s tax-to-GDP ratio hovers around 9%, while less than 3.4 million people are active taxpayers – two numbers that speak volumes about the inefficiency of the FBR and the failed donors-driven past attempts to restructure the tax machinery.
Read: PM directs hiring of foreign consultant for FBR
According to the MoU, the FBR will provide any existing assessment reports and studies, tax reforms agenda, vision, guidance, data, support, and relevant decision-making to Karandaaz to help the entity provide technical assistance. However, the FBR will not provide the personal details of the citizens.
The FBR will also provide all such data that help demonstrate the impact of the technical assistance and can be useful for the purposes of improving performance quality for stakeholders.
The agreement has been signed for a period of two years and can be further extended.
Karandaaz Pakistan will hire a consulting firm that has a proven track record of developing comprehensive digital strategies and implementation programmes for large public sector organisations, comparable to a tax regulatory authority in particular.
The consulting firm will also have proven expertise in business process assessment, improvement, and reengineering, including experience in data management, structuring, analytics, and governance.
The consulting firm will prepare a digital and IT transformation strategy and develop an implementation programme. It will also be required to mobilise the implementation of the devised programme to support procurement of the new IT systems, costing of the systems, and advisory for identifying the most suitable vendors.
The consulting firm will also design the change management strategy related to the digitalisation initiatives.
Karandaaz, on the advice of and in consultation with the Gates’ Foundation, will engage with FBR for the provision of financial and technical assistance, support, provision of works, and services that may be required by FBR for digitalising the tax system.
A Donors Coordination Committee will be established to share information and resources that could be leveraged to achieve the desired outcomes without duplication of effort and consumption of resources.
Published in The Express Tribune, March 16th, 2024.
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