According to the World Bank, the Federal Board of Revenue (FBR) lacks the capacity to analyze big data to detect tax evasion, as well as access to data taxpayers (WB).
According to the Bank’s project document on “Environmental and Social Management Plan Pakistan Raises Revenue Project (PRRP),” effective compliance control in modern revenue administration relies on the collection and analysis of taxpayer/trader data from a variety of sources, including provincial tax authorities, other government entities, foreign jurisdictions, and withholding agents.
The FBR lacks access to many of these data sources as well as the ability to analyse big data in order to detect tax evasion. The FBR’s main Information Technology (IT) systems—the Inland Revenue Information System (IRIS) for income tax, the Sales Tax Realtime Invoice Verification (STRIVE) system for General Sales Tax (GST), and the Web Based One Custom (WeBOC) system for Customs—have automated some business processes, such as tax return and goods declaration filing (GDs). However, these systems do not share data and lack critical features such as tax arrears tracking and a transit module (WeBOC).
As a result, the FBR requires the Information and Communication Technology (ICT) infrastructure and technical skills to integrate and analyse big data while maintaining adequate data security. ICT investments in simplified and automated business processes will increase efficiency by enabling paperless administration, real-time communication with FBR field offices, and e-services for taxpayers.
The FBR is implementing the Pakistan Raises Revenue Project (PRRP) to upgrade its information and communication technology systems throughout Pakistan. The project’s goal is to contribute to a long-term increase in domestic revenue by broadening the tax base and making compliance easier. The majority of existing equipment at FBR offices is decades old and prone to failure, necessitating the replacement of existing equipment before any system failure occurs, resulting in the discontinuation of tax-payer services.
This is a five-year project that does not include major civil works, land acquisition and displacement, or operations in protected areas or indigenous peoples’ habitations.
The project’s social risk classification is moderate due to the risks of exclusion and labor-related risks. Environmental risks are categorised as Moderate and are related to e-waste management risks. As a result, the project’s overall environmental and social risk classification is moderate.
The PRRP is divided into two parts. Component 1 entails simplifying the tax administration framework in order to make procedures, such as appeals and penalties, more transparent and understandable to taxpayers and tax administration staff alike. Component 1 also focuses on risk-based inspections and post-clearance audits (PCA) in Customs, the expansion of e-services for taxpayers and traders, and FBR institutional development for efficiency and accountability.
FBR intends to upgrade its information technology (IT) systems, including a high-capacity data warehouse to support big data analysis and database integration, as well as replace end-of-life data centre equipment. To carry out its reform initiatives, the tax authority must modernise its information and computer technology infrastructure by utilising cutting-edge technologies in its data centres.