PRAL Board Reconstitution to Enhance Digitalisation in Pakistan

In a significant move aimed at enhancing the efficiency of Pakistan's tax system, Finance Minister Muhammad Aurangzeb has approved the reconstitution of the board of directors for Pakistan Revenue Automation Ltd (PRAL). This decision, made during a virtual meeting of the Cabinet Committee on State-Owned Enterprises, is part of a broader strategy to accelerate the digitalisation of the tax process in the country.

The Federal Board of Revenue (FBR) has already set clear timelines for the complete reform of PRAL, which is crucial for modernising tax collection and improving transparency. An official announcement revealed that the meeting reviewed recommendations from the board nominations committee, which proposed five independent directors and four ex-officio members, in accordance with the Enterprises (Governance and Operations) Act 2023.

All five independent directors recommended for the board are seasoned professionals from the private sector, bringing with them extensive experience in top management roles. Their qualifications span law, accountancy, and management, ensuring that the board is well-equipped to tackle the challenges ahead.

FBR Chairman Rashid Mahmood Langrial has already presented the reorganisation plan to Prime Minister Shehbaz Sharif, highlighting the urgent need for enhanced procurement capabilities within the FBR. This need has resulted in significant delays, particularly in acquiring essential equipment like scanners and data centres, which are vital for documenting the economy effectively.

Under the Pakistan Raises Revenue initiative, a loan agreement with the World Bank was established in 2019 to fund the purchase of scanners for Rs8.3 billion. However, the FBR has yet to initiate the bidding process, causing further setbacks. The reform initiative also aims to create a transparent procurement mechanism and increase the FBR's operational capacity. As part of this agreement, Pakistan is expected to allocate an additional Rs5.4 billion for data centre purchases, but these funds remain unutilised due to the FBR's capacity issues.

Recognising the urgency of the situation, the Prime Minister has instructed the FBR chairman to expedite the execution of these projects within the next few months. A separate procurement cell will be established to streamline these processes. The proposed improvements for PRAL include finalising a new cost plan by October 15, which is already drafted and awaiting board approval.

By the end of next month, the PRAL board is expected to finalise a revised employee remuneration package. Depending on the final cost plan, a new service level agreement (SLA) between the FBR and PRAL will be signed by November 10. This period will also see the hiring of new resources and optimisation of existing ones.

In the official announcement, the finance minister praised the decision to appoint a majority of independent directors and select prominent professionals from the SME sector to lead the PRAL board. He expressed hope that this new board would provide strong oversight and effective management, ultimately helping to achieve the government's revenue generation goals.

This reconstitution of the PRAL board marks a pivotal step towards modernising Pakistan's tax system. By embracing digitalisation and enhancing operational efficiency, the government aims to create a more transparent and effective tax collection process. As these reforms unfold, they hold the potential to significantly improve the country's economic landscape, benefiting both the government and the citizens.