ISLAMABAD: The Organization for Economic Co-operation and Development (OECD) will support Pakistan in transparency and automatic exchange of information and to conduct criminal investigations under its initiative known as Tax Inspectors Without Borders (TIWB).
In a detailed report prepared by the Platform for Collaborative Tax Matters (PCT), including the International Monetary Fund (IMF), the United Nations (UN), the OECD and the World Bank Group (WBG) continued their support to countries by publishing common knowledge products, technical assistance on tax responses to the crisis and workshops on critical issues.
The OECD Tax Inspectors Without Borders (TIWB) initiative provides practical support to developing countries to assist them in carrying out effective audits for tax purposes.
In the case of Pakistan, the UK’s HMRC signed a confidentiality agreement and helped Pakistan conduct an effective audit. Overall, with the help of the OECD and other development partners, different countries valued more than $ 3 billion through tax audits and recovered $ 1.5 billion. As part of the TIWB initiative, Pakistan once again called on the OECD to help its criminal investigators conduct an effective investigation when it comes to tax matters.
In a Pakistan case study, the PCT report indicated that the Pakistani government was continuing to develop a Medium Term Revenue Strategy (MTRS) with close support from the WB and other development partners working on it. improved domestic revenue mobilization (DRM).
Recently, the MTRS benefited from a multi-donor engagement to implement the Tax Administration Diagnostic Toolkit (TADAT) to assess tax administration performance and practices. TADAT will provide an evidence-based assessment of key gaps against good practice and establish a baseline for further reforms. Based on the latter, development partners will define the framework for further assistance with the leadership of the Federal Board of Revenue (FBR). This will allow for better coordination and focus on key areas where development partners working in this space have a relative comparative advantage. In this context, the WB will continue to assist the FBR in consolidating the MTRS by providing technical advice in tax policy and tax administration, including in customs areas.
TCP partners coordinate with each other and with other development partners during the design phase of projects. Partners mutually solicit their contributions on interventions in order to benefit from expertise and strengthen synergies by keeping each other informed of upcoming activities. Through frequent checks, partners ensure a clear division of labor and conduct their work without close coordination of day-to-day activities.
The IMF and WBG have high levels of information exchange with each other in Pakistan, led by country teams and supported by the Pakistan Revenue Authority. The WBG sought advice from the IMF on the technical design and structure of its major reform program. The IMF has regular e-mail exchanges and meetings with the WBG to discuss aspects of the two teams’ reform programs. The OECD held meetings with the WBG team, both in Pakistan and at headquarters, to understand the added value of each organization, as well as to inform the sequencing of activities.
The OECD specializes in international taxation. Its activities include an induction program that provided Pakistan with advice to implement the minimum standards and put in place the standards and institutions to fight BEPS, a capacity building program of the Global Forum on Transparency and the exchange of information for tax purposes, which was designed in close collaboration with the United Kingdom (United Kingdom), to support Pakistan in transparency and information exchange, and a support program for tax purposes. tax audits and investigation of tax offenses with UNDP on its TWIB program.
The Asian Development Bank (AfDB) is leading a Diagnostic Tax Administration Assessment (TADAT), with input from the IMF, WBG, and the Foreign and Commonwealth & Development Office (FCDO), UK. In the area of tax administration, the IMF team focuses on managing the risk of non-compliance while the WBG team focuses on improving the results of tax audits.
The WBG requested AfDB’s support to define the scope of the Automated Entry-Exit System (AEES) activities due to the notable modernization interventions that the AfDB was already undertaking at land border crossings. In the area of tax policy, providers of capacity development support have worked in related but different areas. On some emerging issues, such as the creation of a tax policy unit, further coordination is needed to ensure that partner boards are aligned.
Steps to Improve Future Collaboration: The TCP partner teams in Pakistan all expressed support for future collaboration in the future. The OECD supports coordination with other organizations in sequencing reforms to maximize efficiency but also suggests simplifying administrative procedures to facilitate co-financing of activities.