FBR to Brief PM on Digital Tax Reforms

Pakistan’s Federal Board of Revenue (FBR) is set to brief Prime Minister Shehbaz Sharif on its faceless tax administration system, AI-based return analysis and digital monitoring of industrial activity, as the government seeks to address an estimated tax gap exceeding Rs1 trillion across 18 sectors.

Pakistan’s Federal Board of Revenue (FBR) is scheduled to brief Prime Minister Shehbaz Sharif on its tax administration reforms, including the rollout of a faceless taxation system, artificial intelligence-based tax return analysis and digital monitoring of industrial production.

According to Business Recorder, the briefing will cover the FBR’s transformation plan and measures intended to narrow a tax gap estimated at more than Rs1 trillion across 18 sectors. FBR headquarters remained open on Sunday as officials finalised the presentation for the high-level review meeting.

The government aims to complete digital monitoring of sales and production across major industries by the end of December 2026. The initiative is designed to improve visibility into industrial activity, identify tax leakages and reduce the gap between actual revenue collection and the country’s potential tax receipts.

Monitoring systems have already been fully installed in the sugar, cement, tobacco, tiles and fertiliser sectors. Installation is underway in textile manufacturing, packaged water, packaged juice and packaged milk. Equipment procurement for steel, poultry and tyres was scheduled for completion by October 15, while procurement for tea, household electronics, leather, paper and board, and oil and ghee was scheduled for October 30.

The review will also assess the FBR’s digital ecosystem initiative, which seeks to connect information across supply chains, from raw material production and imports to manufacturing and final consumer purchases. Integrating this data could help authorities identify discrepancies, strengthen enforcement and improve economic decision-making.

A related report by Dawn said the prime minister had directed the FBR to complete digital production monitoring across major industries by December 31, 2026. The wider effort includes camera-based monitoring intended to improve sales tax compliance.

The meeting is also expected to review the implementation of the faceless system on the Inland Revenue side. The reform aims to reduce direct contact between taxpayers and tax officials, limiting opportunities for discretionary treatment and strengthening transparency.

The FBR will present proposals for human resource reforms, institutional restructuring and improvements to tax administration. These measures form part of the government’s broader effort to modernise revenue collection, improve accountability and strengthen the documentation of economic activity.

The effectiveness of the reforms will depend on timely implementation, reliable data integration and consistent monitoring across sectors. The government’s December deadline represents a key milestone in its push to improve tax compliance and address persistent revenue shortfalls.