ISLAMABAD: The government has decided to amend the Federal Board of Revenue Act 2007 through the upcoming Finance Act 2026 to shift tax policy responsibilities from the Federal Board of Revenue to a newly created Tax Policy Office under the Ministry of Finance Pakistan.
According to details, the proposed amendment aims to establish a clear separation between tax policy formulation and tax administration as part of broader reforms in Pakistan’s fiscal management system. Under the plan, the new Tax Policy Office will independently design and analyze fiscal policies, while the Federal Board of Revenue will continue focusing on revenue collection, enforcement, and operational matters.
While briefing the Senate Standing Committee on Finance, Aurangzeb explained that the government has already established the Tax Policy Office within the Ministry of Finance Pakistan to handle policy formulation independently from the tax collection authority. He said the new structure would ensure improved transparency and better governance in Pakistan’s tax system.
The finance minister further stated that the creation of the Tax Policy Office makes the existing Tax Policy Board of the Federal Board of Revenue redundant. As a result, the government plans to remove Section 6 of the Federal Board of Revenue Act 2007 and eliminate all references to the Policy Board through legislative amendments in the upcoming Finance Act 2026.
Chairman Federal Board of Revenue Rashid Mahmood Langrial informed the committee that tax proposals for the federal budget 2026–27 will now be prepared by the newly established Tax Policy Office instead of the FBR.
He clarified that while the tax policy function will shift to the Finance Ministry, operational and administrative responsibilities will remain with the Federal Board of Revenue.
Langrial added that amendments to the Rules of Business and the Federal Board of Revenue Act 2007 will be necessary to fully empower the Tax Policy Office and enable it to perform its policy functions effectively.
During the meeting, Senator Talha Mahmood raised concerns regarding the restructuring of the tax policy framework. He argued that tax policy is a highly technical field and suggested that an FBR member should lead the policy-making function.
The senator also pointed out the negative perception of tax authorities among the business community, claiming that many businessmen prefer paying bribes instead of dealing with tax officials due to a lack of trust in the system.
He proposed that the assets of tax officials be examined by the Federal Investigation Agency to improve accountability.
Responding to the concerns, Finance Minister Muhammad Aurangzeb assured lawmakers that the government is committed to ensuring transparency and eliminating corruption within the tax administration.
He emphasized that all civil servants, including officials of the Federal Board of Revenue, are required to declare their assets and that strict action would be taken against anyone found involved in corruption.
The FBR chairman also highlighted another proposed amendment to the Federal Board of Revenue Act 2007 related to the appointment of senior officials.
Under the proposed changes, the Secretary of the Revenue Division will be authorized to appoint FBR members through transfers and postings of officers in Grade-21 and above working within the organization.
According to Langrial, the Federal Board of Revenue currently has more than 80 officers in Grade-21, and frequent transfers occur within the tax administration. Granting appointment authority to the Secretary Revenue Division would help remove legal ambiguities and ensure administrative continuity within the institution.
However, he clarified that the authority to appoint the Chairman and Members of the Board will remain with the federal government.
The proposed reforms are part of the government’s broader strategy to modernize Pakistan’s tax system, strengthen institutional governance, and improve transparency in fiscal policy formulation while allowing the Federal Board of Revenue to focus more effectively on revenue administration and enforcement.
