Structural changes in FBR - Impact on CSP's of CEG and ITC

[Arif Rao]

In past few months there have been reports from FBR that few tax divisions (sales, excise etc) have been merged into one and called as IRS (Inland Revenue Service)

Initial news were published in Business Recorder on Jan 14, 2009:
"FBR meets IMF condition on co-location of income, sales tax"

an excerpt from the news
According to sources, the FBR intends to merge income tax, sales tax and Federal excise groups into one group to be known as Inland Revenue Service with an objective to provide state of the art services under one roof. Customs would be renamed as Pakistan Customs Services.

Later the details appeared on the FBR web site:

Tax administrations of Direct Taxes, Sales Tax and Federal Excise integrated into Inland Revenue
The Human Resource Management (HRM) wing of the Federal Board of Revenue (FBR) organised a day-long workshop on 'Change Management' at a local hotel in Islamabad on February 18, 2009... FBR has been undergoing a comprehensive Program of Tax Administration Reforms...
Accordingly, the tax administrations of direct tax, sales tax and federal excise have been integrated into a single position of Inland Revenue headed by a single Member. He is responsible for all field operations at the Regional Tax Offices and Large Taxpayers Units across the country...

This change was reportedly welcomed by the officers /officials of Income Tax Group whereas the Officers /officials of Custom & Excise Group protested against these changes, the latters being affected by the said decision.

Subsequently, the officials of customs and excise group made a petition to the Islamabad High Court stating that:
The respondents (the Federation and the FBR Chairman) with mala fide intention have snatched the Excise and Sales Tax assessment and collection function from the Customs and Excise Group and have given the same to the Income Tax Group.

Consequently, The IHC suspended FBR notifications, office orders for the Creation of FBR Inland Revenue Wing on May 07, 2009.

On May 08, 2009, The Prime Minister Secretariat has issued a directive to the advisor to the PM on Finance and Revenue, Shaukat Tareen to meet the association of the Officers of Customs and Excise Group for resolution of dispute over the merger of sales tax and income tax into Inland Revenue Wing under reforms in tax administration.

Having mentioned all this, I would like to express my concerns over the situation arising after the dust settles. It will certainly be of great importance to many of our fellows who already have or are going to join their service in one of these two groups.

I would like to have comments/ opinions and some more authentic and latest news regarding the issue from our members.

[Indelible]

I think that the decision made by FBR is just like boon from heavens for Income Tax officers.Excise and Sales Tax is a large segment of C & E group and i do not think that they will like their wings being cliped in such a way. With sales tax and excise gone and a world moving ever closer on an agreement on WTO the future of Customs seems bleak. I think that by the creation of Inland Revenue services, income tax officials have come out as winners at the cost of Customs and Excise officials.