ISLAMABAD: On Monday, a Pakistani Federal Board of Revenue (FBR) team and the Supreme Court Bar Association (SCBA) met the International Monetary Fund (IMF) team and discussed key points like tax reforms, enhancing collection of taxes, judicial effectiveness, enforcement of contracts, and preservation of property rights.
The IMF teams are in Pakistan to assess the governance of the country, including tax policies, corruption, audits, anti-money laundering, and other key areas related to financial management. They are holding meetings with different authorities to know the ground realities and recommend changes.
Tax Reforms and Digital Changes
Among the key issues discussed was Pakistan’s tax reform strategy, under which it hopes to bridge the huge gap in tax revenues. The FBR puts the country’s losses of taxes at over Rs 7 trillion. The IMF team was given a preliminary overview of this strategy that relies significantly on digital technology to enhance tax collection and enforcement.
The strategy entails creating all tax offices “model tax offices” (MTOs) and enhancing enforcement to lower smuggling. The government also intends to decrease the volume of cash held in circulation. It is at this moment that Pakistan holds 25% cash money, whereas nations like India and Bangladesh possess roughly 14%, and Malaysia possesses only 7%.
To increase transparency in the tax system, the plan will prevent unregistered businesses from availing input taxes and will track transactions through digital invoices. There will also be penalties for non-registering or non-compliance by businesses.
Efforts to Improve Judicial Efficiency
In another meeting, the IMF delegation sat down with the Supreme Court Bar Association (SCBA) to talk about enhancing Pakistan’s judiciary. It was about making the courts function more effectively, enhancing contract enforcement, and safeguarding property rights.
SCBA President Mian Mohammad Rauf Atta identified two significant initiatives under way. On the judicial front, the Chief Justice of Pakistan is implementing new mechanisms such as e-filing, improved case management, and video links for hearing cases. These are aimed at accelerating the resolution of cases and enhancing access to courts.
On the legislative front, the government has enacted the 26th Constitutional Amendment to enhance judicial independence and effectiveness. The SCBA also deliberated on establishing special courts to deal with complex matters such as taxes, and new forums to settle disputes speedily through techniques such as Alternative Dispute Resolution (ADR).
Challenges with Contract Enforcement and Property Rights
The IMF delegation also learned about the difficulties in enforcing contracts in Pakistan. While there are delays in the process, the government is making efforts to provide a more favorable environment for foreign investment by establishing special courts to deal with such cases more quickly.
The IMF was briefed on the fact that Pakistan’s Constitution (Articles 23 and 24) guarantees the right to property. Such measures are being taken to enhance laws for illegal encroachment on properties and enhance implementation.
The IMF team would issue a questionnaire to the SCBA to understand more about the problem and collaborate in enhancing Pakistan’s governance and legal systems.
