ISLAMABAD: The government is considering introducing changes in the Finance Bill for 2026-27 to ensure a smooth transition to the three-wing model in the fold of Federal Board of Revenue (FBR) for implementing the OECD model.
“The government is considering inserting enabling provisions in the Finance Bill for 2026-27 to ensure transition towards three-wing model from the next fiscal year. It aims at reducing the compliance gap that runs into trillions of rupees on per annum basis,” top official sources confirmed to The News here on Wednesday.
Three wing model proposes the complete structural bifurcation of Inland Revenue operations into three functionally exclusive Wings.
The first wing will be called the National Faceless Audit Wing (NFAW) — centralised, fully digital and anonymous. It will conduct all risk-based audits, monitor Withholding Tax (WHT) and advance tax continuously through the Central Data Hub (CDH), and produce actionable reports based on desk or detailed audits.
National Assessment Wing (NAW): it will exercise all quasi-judicial powers, conduct formal assessment orders, show-cause notices, refund sanctioning and exemption processing. It will have no audit powers and no field enforcement.
Field Operations Wing (FOW): It will be the field arm. Executes confirmed demands, conducts prosecution, registers taxpayers, broadens the tax base, conducts field work and verifications and provides economic surveillance that feeds directly into the CDH. But it cannot assess, cannot adjudicate and cannot modify any confirmed demand. The verification assignments are algorithmically allocated to prevent officer-taxpayer familiarity.
The transition to the three-wing model involves reconstituting the existing field formation structure. Field office audit and assessment functions migrate to NFAW (audit and inquiry) and NAW (adjudication); officers are redeployed on a merit-based selection process.
The Regional Taxpayer Offices (RTOs) are reconstituted as FOW territorial units, retaining the existing geographic footprint.
The Refund Commissionerates are absorbed into NAW’s Refund Processing Unit. NFAW and NAW positions carry higher grade and specialisation allowances with location-agnostic deployment. The FOW positions carry recovery-linked performance incentives. Officers of NFAW and NAW are protected from premature transfer or disciplinary action in respect of good-faith official acts by the Independent Officer Review Committee (IORC).
The sources said that the bifurcation model of establishing wings within the IRS was once implemented under the World Bank’s funded Tax Administration Reform (TARP), but it was reversed within a short span of time. Now again this model is being explored for execution in the FBR, but the question arises as to how different wings will avoid shifting the buck to the shoulders of others and how every wing will work in a synergized manner. In a working culture where everyone shifts the buck to other, how will this model succeed in such a working environment?
However, FBR officials say that this model was deliberated and prepared with home grown approach, and it can only succeed if there will be element of ownership among the officers belonging to the Inland Revenue Service (IRS) group; otherwise, it will remain an unfulfilled dream.
