KARACHI: Pakistan’s Finance Minister Muhammad Aurangzeb said on Saturday the government’s overhaul of the national tax collection agency had entered the implementation stage, with artificial intelligence-driven systems beginning to deliver measurable results as authorities seek to broaden the tax base and reduce human discretion.
The reforms form part of the government’s wider effort to modernize tax administration, improve compliance and raise revenues under an economic reform agenda that has increasingly emphasized digitization, data analytics and technology-driven governance.
“This is not something which is in the design phase,” Aurangzeb said in televised remarks at the Lahore University of Management Sciences. “It is very much in execution and implementation and therefore we are beginning to see the operational effectiveness around 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) that collects taxes, adding it would eliminate the concentration of powers previously exercised by individual tax officers, with implementation increasingly driven by artificial intelligence, technology and data analytics.
He said digital production monitoring was now operational in four sectors and was being implemented or designed across 16 more, which collectively account for around 70 percent of Pakistan’s manufacturing gross domestic product.
The finance minister said monitored production in the sugar sector had risen 31 percent during the latest crushing season, with the system expected to generate about Rs27 billion ($97 million) in additional revenue, while authorities had recovered Rs32 billion ($115 million) from the cement sector.
“Sales tax theft is one of the most criminal activities because you are collecting that money to pass it on to the exchequer,” Aurangzeb said. “We are going to actually go after all sectors where this is happening, because this is not something which we can tolerate or quite frankly afford anymore.”
He said the FBR’s AI-powered risk engine had identified 840 high-risk audit cases with an estimated additional revenue potential of Rs34 billion ($122 million), after integrating taxpayer records with data from the national identity database to identify discrepancies between declared income and lifestyles.
Aurangzeb said faceless customs assessments had increased the average declared value of consignments to Rs7.8 million ($28,000) from Rs6.3 million ($23,000) while reducing direct interaction between tax officials and businesses.
He said tax collection had risen from Rs9.3 trillion ($33.5 billion) in fiscal year 2023-24 to Rs13 trillion ($46.8 billion) in the last fiscal year, an increase of about 40 percent over two years, adding that the reforms aimed to make compliance easier for honest taxpayers while strengthening institutions through technology rather than individual discretion.
