KARACHI: Pakistan’s Finance Minister Muhammad Aurangzeb said on Saturday that the government’s review of the national tax collection agency has entered the implementation stage, with artificial intelligence-powered systems starting to yield tangible results as authorities seek to widen the tax base and reduce human discretion.
The reforms are part of the government’s broader efforts to modernize tax administration, improve compliance and increase revenue under an economic reform agenda that increasingly emphasizes digitization, data analytics and technology-driven governance.
“This is not something that is on the drawing board,” Aurangzeb said in a televised address at the Lahore University of Management Sciences. “It’s really in the execution and implementation stage, so we’re starting to see some operational effectiveness on this.”
“Our vision is clear,” he continued. “A documented economy, a digitally integrated state and public institutions, where technology replaces discretion, transparency replaces opacity, and facilitation replaces harassment.”
Aurangzeb said Parliament had approved a new operating model for the Federal Board of Revenue (FBR), which collects taxes, eliminating the concentration of powers hitherto exercised by individual tax officials, adding that its implementation will be increasingly driven by artificial intelligence, technology and data analytics.
He said digital production monitoring is currently operational in four sectors and is being implemented or designed across 16 more sectors, which together account for about 70 per cent of Pakistan’s manufacturing gross domestic product.
The finance minister said the sugar sector’s monitored production increased by 31% in the recent crushing season and the system is expected to generate about 27 billion rupees ($97 million) in additional revenue, while authorities recovered 32 billion rupees ($115 million) from the cement sector.
“Theft of sales tax is one of the most criminal acts because the money is collected and given to the finance ministry,” Aurangzeb said. “We’re really going to go after every sector where this is happening, because this is no longer something we can tolerate and frankly cannot afford.”
He said FBR’s AI-powered risk engine identified 840 high-risk audit cases with potential for estimated additional income by integrating data from taxpayer records and national identification databases to identify discrepancies between declared income and lifestyle.
Aurangzeb said faceless customs assessments had reduced the direct interaction between tax authorities and businesses, while increasing the average declared value of shipments from 6.3 million rupees ($23,000) to 7.8 million rupees ($28,000).
He said tax collections had increased from 9.3 trillion rupees ($33.5 billion) in the 2023-24 financial year to 13 trillion rupees ($46.8 billion) last year, an increase of about 40% in two years, adding that the reforms aim to make compliance easier for honest taxpayers while strengthening the system through technology rather than individual discretion.
