Pakistan: wither tax reforms — the case of large taxpayers’ unit, Islamabad

Muhammad Ashfaq Ahmed


Pakistan tax system reforms carried out during 2001–2010, were overwhelming, expensive, and a failure. The reforms were financially afforded and technically assisted by World Bank. While both Government of Pakistan and World Bank agreed on the failure of tax reforms, each blamed the other for the failure. A consensus, however, does exist as regards the fact that the reform program left the tax system more gridlocked, retrofitted, and incapacitated than before to generate both sufficient and healthy revenues. The paper adopts case study approach to explore into the factors of failure of the reform program. The study is anchored in Large Taxpayers’ Unit, Islamabad — a flagship taxing field formation established under the reform project. The data are produced from Large Taxpayers’ Unit, Islamabad, to assess its jurisdictional, functional, and operational capacity and explain why its tax collection curve flattens after 2012. The insights so derived at micro-level are made to feed back into macro-canvass of the program and enhance our holistic understanding and see its failure in a different and closer-to-reality light. The analysis is extrapolated to the national level to argue that as soon as political ownership and donor oversight — the key drivers — were omitted from the equation, the resultant resource constrains were enough to frustrate and fail the entire reform program. The conclusions drawn are generalizable to most similarly-circumstanced developing countries and their rigidly underperforming tax systems.


1. The evaluation of a tax reform program being essentially subjective could well be undertaken by adopting case study approach that generates empirics at micro-level, which get fed into the analytics at the macro-level

2. In order for the tax reform evaluation to stay comprehensively meaningful, it covers the micro locale being evaluated across its full spectrum i.e. jurisdictional, functional, and operational capacity

3. Continued political ownership and donor oversight are key variables of a tax reform program, and their elimination from the equation mid-stream potentially results in reversing and even perverting the entire reform agenda


Ahmed M. A. Pakistan: wither tax reforms — the case of large taxpayers’ unit, Islamabad. Journal of Tax Reform, 2018, vol. 4, no. 3, pp. 202–222. DOI: 10.15826/jtr.2018.4.3.052


Received August 30, 2018; accepted December 9, 2018


Pakistan tax system; tax reforms; Large Taxpayers’ Unit; World Bank reforms; Federal Board of Revenue; tax administration

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Copyright (c) 2018 Muhammad Ashfaq Ahmed

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