Muhammad Aurangzeb, the Finance Minister of Pakistan, highlighted the necessity for the digital transformation of the Federal Board of Revenue (FBR) to improve the efficiency and transparency of the country’s tax collection processes.
The announcement was made during a meeting with FBR officials, where Aurangzeb presented his strategy to fully digitise the tax system and incorporate the incomes of retailers and wholesalers into the tax net as part of the government’s effort to document the economy comprehensively.
This move comes ahead of Pakistan’s second review under the $3 billion Stand-By Arrangement with the International Monetary Fund (IMF), set to take place from March 14-18.
The finance ministry stated that Pakistan has achieved all the required benchmarks and targets, setting the stage for the final review and expecting a Staff-Level Agreement that will unlock a $1.1 billion disbursement from the IMF.
FBR Chairman Zubair Tiwana provided an overview of the tax collection performance over the past eight months and outlined proposed digitalisation measures, including a new taxation scheme for various professionals.
This scheme, already approved by the federal cabinet, aims to generate additional revenue by taxing the indicative incomes of traders and professionals, relying on criteria such as shop location, value, and rent.
Furthermore, the minister was briefed on a comprehensive proposal for a digital and technology-driven tax system utilising big data.
This initiative requires significant investment in infrastructure and specialized software to facilitate the anticipated improvements.
The digitalisation efforts are expected to significantly increase tax collection, with projections indicating a rise to Rs31.72 trillion by FY27 from Rs7.16 trillion in FY24, and an increase in the tax-to-GDP ratio to 20% from 8.5%.
Officials attending the meeting noted the professional approach of Minister Aurangzeb, emphasising action and implementation over previous tendencies toward blame attribution.
Aurangzeb stressed the importance of leveraging technology to modernise the tax administration, aiming to foster a more equitable system that supports economic growth and benefits the populace.
Sure digitalisation will bring transparency in system.