ISLAMABAD: Pakistan on Friday struck a deal to use the resources of the Bill and Melinda Gates Foundation to improve the poor efficiency of the Federal Board of Revenue (FBR), which aims to increase the extremely narrow tax base and low collection.
The Memorandum of Understanding (MoU) was signed by representatives of the FBR and Karandaaz Pakistan – an entity sponsored by the British Foreign, Commonwealth and Development Office and the Bill and Melinda Gates Foundation.
Karandaaz Pakistan CEO Waqasul Hasan also met Finance Minister Muhammad Aurangzeb before signing the agreement. Aurangzeb has pledged to completely digitize the FBR to end corruption and leakages.
Using funding from the Gates Foundation, Karandaaz Pakistan will hire a consulting firm to assess business needs, existing IT infrastructure, systems, business processes, all existing available information, and assessment reports to establish the context and scope of work for digitization of the tax system of Pakistan.
At the behest of Prime Minister Shehbaz Sharif, Karandaaz Pakistan engaged in a coup in the antiquated tax system. The decision to involve Karandaaz Pakistan underscores that Pakistan’s $400 million in revenue-raising World Bank and Asian Development Bank’s $300 million domestic resource mobilization programs have not yielded the desired results.
Pakistan’s tax-to-GDP ratio hovers around 9%, while less than 3.4 million people are active taxpayers – two figures that speak to the inefficiency of the FBR and the failed past attempts to restructure the donor-led tax machinery.
According to the MoU, FBR will provide Karandaaz with all existing assessment reports and studies, tax reform agenda, vision, guidelines, data, support, and relevant decision-making to help the entity provide technical assistance. However, FBR will not provide the personal data of citizens.
The FBR will also provide all such data that will help demonstrate the impact of the technical assistance and may be useful for improving the quality of performance for the stakeholders.
The contract is signed for two years and can be further extended.
Karandaaz Pakistan will hire a consulting firm that has proven experience in developing comprehensive digital strategies and implementation programs for large public sector organizations, comparable in particular to a tax regulatory authority.
The consulting firm will also have proven expertise in business process assessment, improvement, and reengineering, including experience in data management, structuring, analytics, and governance.
The consulting firm will prepare a digital and IT transformation strategy and develop an implementation program. It will also be necessary to mobilize the implementation of the proposed program to support the awarding of contracts for new IT systems, the costing of systems, and consulting for the identification of the most suitable vendors.
The consulting firm will also design a change management strategy related to digitization initiatives.
Karandaaz, on the advice and consultation of the Gates Foundation, will engage with the FBR to provide financial and technical assistance, support, provision of work, and services as may be required by the FBR for the digitization of the tax system.
A Donor Coordination Committee will be established to share information and resources that could be used to achieve the desired results without duplicating efforts and consuming resources.
