The Ministry of Finance has announced its plans to recruit six professionals to establish a dedicated Tax Policy Office (TPO) in line with the conditions outlined in the $7 billion Extended Fund Facility (EFF) agreement with the International Monetary Fund (IMF). This initiative is a significant step toward meeting the IMF’s demand for better tax policy formulation and fiscal governance in Pakistan.
The TPO will operate independently from the Federal Board of Revenue (FBR) to avoid the risk of policy capture by revenue officers. This separation of duties is aimed at ensuring the integrity and independence of tax policy development, free from the influence of administrative functions, and will report directly to Pakistan’s Finance Minister, Muhammad Aurangzeb.
In a move to fill key positions within the new office, the Ministry of Finance has called for applications for a Director General (SPPS-1) and five specialized directors in various fields, including economic analysis, business taxation, personal taxation, international taxation, and direct/indirect taxation (SPPS-II). The recruitment comes after the government approved a revised Special Professional Pay Scale (SPPS) structure last April. Under this new structure, the positions offer attractive salaries—up to Rs. 2 million per month for the Director General and Rs. 1.5 million for the directors.
The creation of the TPO has been a long-standing requirement under the IMF agreement, which has urged the Pakistani government to make reforms to its tax policy formulation process. Despite multiple promises to international lenders over the years, successive governments faced significant resistance from the FBR when trying to separate tax policy from administration. The establishment of the TPO is seen as a vital move to break this long-standing deadlock.
The Tax Policy Office will focus on several key functions, including tax policy analysis, revenue forecasting, and international tax treaty assessments. By bringing in a team of experts in various tax fields, the TPO is expected to contribute to better policy-making that aligns with Pakistan’s economic realities and fiscal needs. This office is also intended to improve coordination between various stakeholders, such as government departments, international organizations, and the private sector, ensuring a more inclusive and forward-thinking approach to tax policy.
Once operational, the TPO is anticipated to play a pivotal role in enhancing tax policy formulation by adopting data-driven insights and best practices in global tax governance. Its efforts will be focused on improving Pakistan’s tax base, making the tax system more equitable and efficient, and improving public trust in the country’s fiscal system.
The recruitment of these six experts represents a commitment by the Pakistani government to meet the expectations set by the IMF under the Extended Fund Facility (EFF). It also signifies a crucial shift towards a more professional and transparent approach to tax policy-making, potentially strengthening Pakistan’s fiscal framework in the long term.
As Pakistan continues to engage with the IMF and fulfill its commitments, the successful implementation of the TPO could serve as a model for other countries striving to reform their tax systems. With a professional and independent office managing tax policy, Pakistan hopes to create a more sustainable and effective tax environment that can support its economic growth and stability.
This move is part of broader fiscal reforms aimed at stabilizing the economy and improving revenue generation in Pakistan, with the IMF’s backing acting as a key motivator for these changes. The TPO’s formation will also ensure that Pakistan’s tax policy is more dynamic, responsive, and aligned with global tax standards, which could foster a more attractive environment for business and investment in the country.