NBR split into two divisions by ordinance

Revenue Policy and Revenue Administration to operate separately

The government has officially issued an ordinance to split the National Board of Revenue (NBR) into two separate entities: the Revenue Policy Division and the Revenue Administration Division.

The ordinance, approved by the Advisory Council on April 17, was formally issued on Tuesday—25 days after the initial approval.

It says the government will announce the effective date of implementation through a separate gazette notification.

Despite plans for a swift rollout, the draft ordinance faced backlash once it was published online. Officers from the Income Tax and Customs cadres voiced strong objections, with their associations calling for the ordinance to be revoked

According to Clause 4(4) of the ordinance, positions within the Revenue Policy Division will be filled by officers with expertise in tax, customs, VAT, economics, business administration, research, statistics, administration, audit, and law. The division’s responsibilities will include evaluating tax enforcement and revenue collection performance.

The ordinance also stipulates that public servants with experience in revenue collection will be given preference for the role of secretary in the Revenue Administration Division. Administrative posts in this division may be filled by officers from the Income Tax, Customs, and Administration cadres.

Currently, top NBR positions are occupied by BCS (Tax) and BCS (Customs & Excise) cadre officers, which align with their designated roles.

The ordinance allows for the appointment of any “suitably qualified government officer” as secretary of the Revenue Policy Division.

It adds that with the dissolution of the NBR, its existing personnel will be absorbed into the Revenue Administration Division. The structure of both new divisions will be defined through future government notifications.

LONG-STANDING PUSH FOR REFORM

The idea of separating revenue policy from revenue administration is not new. The International Monetary Fund (IMF) first proposed the reform in 1993.

The World Bank echoed the call during the military-backed caretaker government in 2007, though the plan never progressed significantly.

In recent years, business leaders, macroeconomic analysts, and international development partners have increasingly advocated for structural reform of the NBR, recommending a clear split between policy-making and administration.

Following the political transition on Aug 5, 2024, the interim government initiated a broader reform agenda. As part of this, the Internal Resources Division (IRD) formed a five-member advisory committee to reform the NBR.

The committee included two former NBR chairmen from the Administration cadre, as well as two former members from the Tax and Customs cadres with experience in policy and revenue collection.

In December, the committee submitted a report to the finance advisor recommending the creation of separate divisions for Revenue Policy and Revenue Administration.