FBR to set up International Centre of Tax Excellence For Independent Expert Input

In a significant move aimed at enhancing the drafting of tax policy, the Federal Board of Revenue (FBR) has announced the establishment of the International Centre of Tax Excellence. 

This initiative, as proposed under section “230J” in the Income Tax Ordinance 2001, will introduce an institute dedicated to receiving input from independent tax experts while formulating the country’s tax policies.

The Finance Bill 2023, which recently came to light, outlined the various functions of the Institute. 

These include contributing to the development of tax policy, preparing a model national tax policy, conducting interdisciplinary research on tax administration and policy, facilitating international tax cooperation, forecasting revenue, organizing international seminars, workshops, and conferences on pressing issues faced by tax authorities in the realm of international taxation. 

Enhancing the capacity of Inland Revenue Officers, conducting tax analysis, improving the design and delivery of tax administration to maximize revenue within existing provisions, and addressing the tax gap. 

Additionally, the Institute may perform any other function directed by the Board or the Federal Government.

To ensure a fair and transparent selection process, a Nominating Committee will be formed. This committee will consist of the Minister-in-Charge, Secretary of the Revenue Division, and Secretary of Finance, who will recommend a panel of candidates to the Federal Government to appoint an Executive Director and independent members of the Executive Committee. 

The Executive Committee, comprising the Chairman of the Federal Board of Revenue, a Member (IR-Policy), a Member (IR-Operations), and two independent members appointed by the Federal Government, will oversee the operations of the Institute. The Executive Director will serve as the Secretary of the Executive Committee and act as the Chief Executive of the 

Institute, ensuring efficient functioning and day-to-day administrative responsibilities. Notably, the Executive Director will maintain independence while discharging the specified functions.

The Executive Committee will assign the tasks and requirements of the Board to be carried out by the Institute during each fiscal year. Furthermore, the Committee will establish recruitment rules for the Institute, and at least fifty percent of the employees will comprise serving or retired Inland Revenue officers with a minimum of five years of experience in tax policy or tax administration. 

The Federal Government will determine the remuneration and terms of employment for Institute employees. Additionally, the Board may form a monitoring committee responsible for overseeing the establishment of the Institute, including the appointment of a Project Director.

To facilitate its operations, the Board will provide necessary data to the Institute. However, before transmission, the data will be anonymized, ensuring the confidentiality of taxpayer information in compliance with section 216(7) of the Income Tax Ordinance.

With the creation of the International Centre of Tax Excellence, the FBR aims to foster collaboration between independent tax experts and government officials, resulting in robust and well-informed tax policies that align with the country’s economic objectives.

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