Pakistan's FBR adopts AI to combat tax avoidance amid recovery failures

The Federal Board of Revenue (FBR) in Pakistan is implementing artificial intelligence and third-party data integration to enhance tax monitoring and reduce avoidance. FBR Chairman Shafqat Mahmood Langrial stated that advanced analytical tools will allow the regulator to process large volumes of data and identify inconsistencies in individual tax returns, making traditional avoidance methods less effective. The agency is also strengthening its faceless assessment system to minimize direct interaction between taxpayers and officials.

Despite these technological advancements, an audit report has highlighted significant failures in tax recovery. The FBR has failed to recover Rs5.62 billion from 106 taxpayers across 14 field offices. These taxpayers reportedly failed to pay taxes on income from other sources, such as profit on debt and exchange gains. The audit noted that assessing authorities did not take timely legal action, a recurring issue that has appeared in five consecutive audit reports. The cumulative financial impact of such irregularities across several years is estimated at Rs53.748 billion.