The World Bank has reported that the Disbursement Linked Indicators (DLIs) related to reducing withholding tax (WHT) lines and implementing a track and trace system are falling short of their targets under the Pakistan Raises Revenue project. The Bank’s assessment indicates that overall progress on the $400 million project is rated as moderately satisfactory, with the Federal Board of Revenue (FBR) tasked with developing a strategy to overcome the challenges and enhance the implementation of these DLIs.
According to official documents, $327.93 million, or 81.98 percent of the project financing, has been disbursed so far, leaving $64.35 million undisbursed. Despite this, the project has made notable progress in several areas, as confirmed by third-party validation and the World Bank team. Achievements include:
- Publication of a detailed tax expenditure and evidence-based revenue forecast report (DLI 2).
- Functional data sharing with all provincial tax authorities (DLI 3).
- Surpassing the target for risk-based audits, with FBR conducting 113 comprehensive field audits and 784 issue-oriented audits (DLI 6).
- Piloting a single returns portal for GST and GSTS with four provincial GSTS authorities, covering the telecom sector (DLI 7).
- Improved customs efficiency with a reduction in physical inspections at the border, from 65 percent in FY19 to 29 percent in FY24 (DLI 8).
- Replacement of paper-based processes with automated internal business processes (DLI 9).
- Continued tracking of Key Performance Indicators and the publication of the annual results report for FY23 and a bi-annual report for FY24, with the FY24 report nearing completion (DLI 10).
However, DLIs 1 (reduction in WHT lines) and 4 (implementation of the track and trace system) are lagging behind their targets. The FBR is expected to formulate a strategy to address these issues and improve performance.
Significant progress has been made in procurements under component 2, particularly for hardware and software needed for data centers and customs automated entry-exit systems. Although technical streams within FBR have not been fully established, officers are currently assigned to positions related to technical and non-technical functions, with a need-based training plan being developed.
Procurements for the Automatic Entry & Exit System (AEES) hardware and software are underway, with deliveries expected by December 2024 or January 2025. Some AEES components, such as the Pre-Arrival Clearance system, have been introduced. Terminal Operators are receiving electronic messages about cargo releases before vessel arrival, and a pilot run of Automated Exit has been conducted. The collectorates are working with Terminal Operators to adjust business processes, hardware, and software to fully implement the AEES.
