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Prime Minister Shehbaz Sharif has ordered the Pakistan Revenue Automation Limited (PRAL) shutdown within six months, a move that could disrupt the country’s entire tax infrastructure. PRAL, which manages the nation’s tax filings and stores transaction data, plays a critical role in FBR operations.
Officials said the Prime Minister gave the instructions last month. He directed that PRAL be dissolved and replaced with a modern, tech-driven organisation. The Federal Board of Revenue (FBR) owns PRAL, a private limited company established over three decades ago.
Taxpayers currently use PRAL to file returns and make payments. However, outdated hardware and software have made the system unreliable. In 2019, the government took a foreign loan to upgrade the system, but failed to meet deadlines.
A $400 million World Bank loan followed, with $80 million reserved for tech upgrades. But overlapping roles between the FBR’s IT and Reforms wings caused delays. Neither wing had full control, which stalled progress.
Concerns Mount Over PRAL Shutdown Timeline
PM Shehbaz now wants a new organisation staffed by top professionals. He asked for full financial and operational independence. The goal is to create a world-class system that supports FBR and taxpayers alike.
Despite the vision, the timeline is tight. Officials doubt the government can build a new organisation by December without disrupting services. PRAL has lacked a chief information security officer for years, which raises more concerns.
Earlier, PM Shehbaz had appointed a new board to reform PRAL. But even the board failed to deliver results. The PRAL shutdown decision came during a meeting attended by board members.
PM Shehbaz had also asked for PRAL’s new data centres to launch by August 14. But servers remain unfinished, and officials fear the centres won’t be ready for inauguration.
The FBR currently runs three data centres in Islamabad and Karachi. Their last upgrade came in 2010. With aging systems and growing data volumes, new facilities are urgently needed. The planned centres aim to boost performance without slowing response times.
Policy Reversals Impact Enforcement
During a recent FBR meeting, officials admitted that softening tax enforcement to appease traders hurt revenue.
The FBR had planned to ban car, property, and stock purchases by non-filers. It also intended to disallow cash-based business expenses. But officials have now walked back those decisions.
A revised statement says cash deposits in sellers’ bank accounts will now qualify as banking transactions. This marks a clear reversal in policy and weakens the enforcement plan shared with the IMF.
As the PRAL shutdown deadline nears, the government must act fast to avoid service disruptions and keep tax reforms on track.
