The federal government is considering significant reforms to Pakistan’s tax administration under the upcoming Finance Bill 2026-27, with plans to restructure the Federal Board of Revenue (FBR) into a three-wing model aimed at improving efficiency, transparency, and tax compliance.
According to official sources, the proposed changes would create separate audit, assessment, and enforcement wings within the Inland Revenue system as part of a broader effort to modernize tax administration and address Pakistan’s longstanding tax compliance gap.
The proposed model is based on international best practices and aligns with the OECD’s digital and data-driven tax administration framework. Officials believe the reforms could help strengthen revenue collection while reducing direct interaction between taxpayers and tax officials.
Under the plan, a National Faceless Audit Wing would be established as a centralized digital unit responsible for conducting risk-based audits and monitoring tax compliance through a Central Data Hub. The wing would independently identify audit cases and generate findings through desk-based and detailed reviews.
A separate National Assessment Wing would handle assessment orders, tax refunds, exemptions, and show-cause notices, exercising quasi-judicial authority over tax matters.
Meanwhile, the Field Operations Wing would focus on enforcement activities, including taxpayer registration, recovery of dues, tax base expansion, field verification, and prosecution of tax-related offenses.
Officials say the separation of responsibilities is intended to improve accountability, minimize conflicts of interest, and streamline tax administration.
As part of the restructuring, existing audit and assessment functions within regional tax offices would be transferred to the newly established national wings. Officers are expected to be reassigned through a merit-based process, while Regional Taxpayer Offices would be reorganized under the enforcement-focused Field Operations Wing.
The proposal also includes performance-based incentives, specialization allowances for audit and assessment officers, and institutional safeguards against arbitrary transfers.
Tax authorities argue that the reforms will support the transition toward a more transparent and technology-driven tax system. However, experts have cautioned that effective coordination among the three wings will be critical to avoiding administrative delays and operational bottlenecks.
The proposed restructuring forms part of the government’s broader revenue reform agenda and is expected to be considered during discussions on the Finance Bill 2026-27 ahead of the new fiscal year.
