Fedral Board Of Revenue

JINNAH

UNIVERSITY FOR WOMEN DEPARTMENT OF COMMERCE B.S PART 2 SEC A

SUBMITTED TO MA`AM FAIZA SUBMITTED BY ANUM KHAN ERMA SALEEM NIMRAH AHMED NOORULAIN

DATED: November , 2008

We would like to thanks ALL MIGHTY ALLAH and present our gratitude to MA’AM FAIZA who acts as a source of encouragement with her guidance and supervision towards this report. We hope the present efforts will live up through the Expectations of all who have invested time, efforts and prayers in making it possible.. WEBSITES: www.google.com www.fbr.gov.pk www.cbr.gov.pk

THANKS.

• HISTORY OF CBR

• HISTORY OF FBR • PRIMARY REASONS FOR CONVERTING CBR INTO 'FBR' • FEDERAL BOARD OF REVENUE • POWERS AND FUNCITONS OF 'FBR'  POWER TO COLLECT REVENUE.  BUDGET ALLOCATION.  ANNUAL REPORT.  HUMAN RESOURCE MANAGEMENT.  ESTABLISHMENT AND MAINTENANCE OF COMPANIES OR SUBSIDIARIES.  EMPLOYEES WELFARE FUND.  REPRESENTATION BY PUBLIC.  RULES AND REGULATIONS.  ASSISTANCE TO THE BOARD.  STATUS OF EXISTING AGREEMENTS WITH CBR.

• HISTORY OF CBR:

The Central Board of Revenue was created on April 01, 1924 through the Central Board of Revenue Act, 1924. In 1944, a full fledged Revenue Division was created under the Ministry of Finance. After independence, this arrangement continued upto 31st August, 1960 when on the recommendations of the Administrative Re-organization Committee, CBR was made an attached department of the Ministry of Finance. In 1974, further changes were made to streamline the organization and its functions. Consequently, the post of Chairman CBR, was created with the status of ex-officio Additional Secretary and Secretary Finance was relieved of his duties as ex-officio Chairman of the Board. In order to remove impediments in the exercise of administrative powers of a Secretary to the Government and effective formulation and implementation of fiscal policy measures, it was decided to restore the status of the CBR as a Division under the Ministry of Finance. Thus, Revenue Division was re-created on October 22, 1991. This experiment continued for a short period. In January, 1995, Revenue Division was abolished and CBR reverted back to the pre-1991 position. However, from December 01, 1998, Revenue Division was once again re-created and it continues to exist as such.

• HISTORY OF FBR: On July 15 2006, the government has decided to convert the Central Board of Revenue (CBR) into an independent entity as 'Federal Board of Revenue' (FBR), enhancing its financial and operational autonomy for smooth functioning, with additional powers to take decisions on taxation/reforms related matters, and to authorize it to demand taxpayer's related information from any department/bank/financial institution/housing society to maintain a 'national database'. The CBR has drafted 'Federal Board of Revenue (FBR) Act, 2006' which would repeal the 'Central Board of Revenue (CBR) Act, 1924'. The FBR would have provisions to override any other government law. The 'FBR Act' would set up an 'Advisory Board' comprising Minister of Finance or Advisor to Prime Minister on Finance and Revenue; Chairman CBR and three other members from the public/private sector. The 'Advisory Board' would be a supervisory body to monitor the functioning of 'FBR' and independently make annual budget allocations.

• FOLLOWING ARE THE PRIMARY REASONS FOR CONVERTING CBR INTO 'FBR': 1. the independent board would give legal sanctity to the ongoing reform process.

2. It will enhance operational and administrative autonomy of the CBR. 3. The 'Board' will take decisions with minimum interference from the Ministry of Finance. 4. It will meet human resource management (HRM) requirements needed for the reformed units. 5. It will help in meeting the international obligations under bilateral treaties/implement international regulatory frameworks. 6. The 'FBR' will meet the requirements of CBR's vision and mission to make it a modern tax-friendly organization. 7. It will give protection to the taxation structure/tax administration under the reform agenda. 8. It would collect taxpayer's information from any government department for compiling a 'national database' 9. It will set up an 'employee’s welfare fund' with an initial capital of Rs 500 million. 10. The 'Federal Board of Revenue Act, 2006' will have provisions to override all other government laws.

The 'Federal Board of Revenue' would create database to ensure proper charge, levy and imposition of taxes, duties, fee, additional tax and surcharges to achieve fair distribution of burden of taxes. The information collected in the database would be kept confidential and would not be disclosed except for purposes authorized by or under any law.

The 'Board' would have the powers to implement through administrative, legislative or enforcement measures international commitments and obligations on the Government of Pakistan under bilateral treaties, multilateral treaties, applicable resolutions of international organizations, proposal of professional bodies etc. It would comply with international regulatory frameworks, safety measures etc as recommended by international bodies. According to the draft 'FBR Act 2006', the CBR would continue to operate, without interruption, as 'Federal Board of Revenue' and regulate fiscal, investment and policy matters; administration management, imposition and collection of Federal taxes, duties, levies, on national level and for connected or ancillary matters.

• FEDERAL BOARD OF REVENUE': The draft stated that the 'Federal Board of Revenue' shall continue to operate without interruption. The head office of the 'Board' shall be in Islamabad. The 'Board' may establish and close down offices, re-locate the offices according to the stream of the taxes, at other places in Pakistan.

administration

The federal government would appoint any suitable person as its chairman for tenure of 3 years, which may be extended on eligibility for another 3 years. The chairman shall be the chief executive officer of the 'Board' and shall, together with other members, be responsible for of the affairs of the Board.

• POWERS AND FUNCITONS OF 'FBR': The 'Board' shall have all necessary powers as may be necessary to perform its duties and functions under 'FBR Act 2006'. It will prepare, with the advice of the Advisory Board, the revenue expenditure budget for each financial year. The 'FBR Board' shall be responsible for the regulation, administration, assessment and collection of taxes, whether federal or provincial, if so provided by law. It will be empowered to conduct research and frame a code of conduct for employees to enforce accountability. The 'Board' may in consultation with the Advisory Board, calculate taxes and duties, adopt streams of taxes and duties and/or make it identifiable as inland revenue and customs duties, or internal taxes and duties. It will identify matters to make policy decisions and may also make recommendations

regarding policy to the federal government for its consideration. The 'Board' may adopt best international practices followed in other countries for improving collecting of duties/taxes.  POWER TO COLLECT REVENUE: The 'Board' may, from time to time, and with the approval of the federal government, collect revenue from sources within Pakistan or from abroad as the case may be, as envisaged in the various legislation to the extent applicable.  BUDGET ALLOCATION: The Ministry of Finance will provide budget for revenue and/or current expenditure and lump sum funds, based on the requirement of the 'Board' to achieve its goals and targets. The 'Board' shall frame financial rules and implement the same on approval of the Finance Division.  ANNUAL REPORT: Within 90 days before the end of each fiscal year, the 'Board' shall prepare a report on its activities including investigations/inquiries and release it to the general public. The 'Board' shall, within 120 days before the end of each financial year, send the statement of accounts and its annual report to the Parliament.  HUMAN RESOURCE MANAGEMENT: The 'Board' may, with the approval of Advisory Board, formulate human resources development and management policies which may include career planning, evaluation for retention in service, and other job and service related matters like posting with the companies or trust formed by the 'Board'. The 'Board' will prescribe selection criteria of employees for postings and transfers in general, and for postings against positions where additional allowances or pay is allowed on regular basis. It will be empowered to appoint non-service persons having the requisite standards of honesty, integrity and skill in business administration, economics, business law, taxation, accountancy and management information system.

Besides other powers, it can ask the CBR employees to disclose the assets owned directly or indirectly by them or their family members.  ESTABLISHMENT AND MAINTENANCE OF COMPANIES

OR SUBSIDIARIES The 'Board' may on need basis, get incorporated and maintain companies for training needs of the 'Board' and its employees, the field offices, organizations or institutions or for the stakeholders; research and development in the relevant fields; campaign to create, awareness and to educate the taxpayers; upgrade skills of the employees and automation purposes. It may transfer or post or place any of its employees to work for the company. The management of such companies will be with the serving or retired members or officers of the 'Board'. The CEO will be appointed from senior serving or retired officer with suitable qualification. The company will have principal office at Islamabad and branch office at Karachi. A committee of the members of the 'Board' shall supervise the functions of such companies.

 EMPLOYEES WELFARE FUND:

A fund called, 'FBR Employees Fund' will be set up for the welfare of 'Board' employees. The fund will be launched with an initial contribution of Rs 500 million. It will also get contribution from the employees of the 'Board' and federal government. The fund will also collect a certain percentage of tax on concealed income, amount realized from sale or additional levies on confiscated goods, proceeds of auctions in recovery proceedings. The fund will meet medical, transport and education and other welfare expenses, and also arrange recreational activities for the officers, employees and their families.  REPRESENTATION BY PUBLIC: Any person, organization or entity may make a representation to the 'Board' to point out any anomaly, tariff discrepancy, interpretation etc under relevant legislation. They may make a representation against any hardship or delay relating to the tax matters. The 'Chairman' shall have the powers to issue orders keeping in view the taxpayer's grievances.

 RULES AND REGULATIONS: The Federal Government may, by notification in the official Gazette, make rules for all or any of the matters in respect of which it is required to make rules to carry out the purposes of the 'FBR Act 2006'. It will be empowered to make rules in the matters relating to the imposition and levy of taxes, duties, and procedures. This shall be subject to the condition of previous publication and before making any rules the draft shall be published in the official Gazette for eliciting public opinion within a period of 30 days from the date of publication.  ASSISTANCE TO THE BOARD: The federal divisions, attached departments, wings, offices, corporations and all the provincial government departments, attached departments, wings and FATA, NA administrations shall assist the 'Federal Board of Revenue' to carry out its functions smoothly.

 STATUS OF EXISTING AGREEMENTS WITH CBR: All existing contracts and agreements made by CBR would continue even after promulgation of the 'FBR Act, 2006' and rules/regulations/SROs issued/adopted by CBR would remain intact.