Islamabad: The government has approved a major overhaul of Pakistan’s tax administration system, introducing a centralised digital operating model designed to eliminate direct contact between taxpayers and tax officials and reduce discretionary powers in assessments and audits.
Prime Minister Shehbaz Sharif has approved the New Tax Operating Model, which will be implemented in three phases starting October this year. The reform aims to shift the Federal Board of Revenue (FBR) towards a fully digital and “faceless” system, similar to models used in several developed economies.
Under the new framework, tax audits, assessments and enforcement will be separated into distinct, functionally independent wings operating through a centralised digital system based in Islamabad. Officials say the restructuring is intended to reduce corruption risks, improve transparency and strengthen tax compliance.
The National Faceless Audit Wing (NFAW) will be responsible for risk-based audits and monitoring using a Central Data Hub. Case selection will be automated through algorithms, and the wing will operate entirely online, without any physical interaction with taxpayers. It will not have the authority to issue tax demands or carry out recoveries.
The National Assessment Wing (NAW) will handle quasi-judicial functions, including issuing assessment orders, processing show-cause notices, refunds and exemptions. Hearings will be conducted digitally, with no mandate for field enforcement or audits.
A separate Field Operations Wing will manage enforcement, including recovery, taxpayer registration, verification and widening of the tax base. However, it will not be involved in audits or assessments, limiting overlap in authority.
Officials said the separation of powers is aimed at reducing the concentration of authority in a single tax officer, which has historically enabled discretionary decision-making. At present, a single officer in tax offices can handle identification, assessment and recovery functions.
The new model will also introduce a centralised digital taxpayer system. Taxpayers will receive pre-filled returns based on data from banks, property records and salary information, reducing filing time and manual input. A unified taxpayer account will consolidate all tax obligations, credits and refunds.
The reform is also backed by data showing significant gaps in compliance. According to FBR figures, thousands of individuals with large bank deposits reported zero income, while high-value property buyers and financial account holders were found to have under-declared transactions.
Officials said the changes are intended not only to improve enforcement but also to simplify compliance for honest taxpayers through automated systems and time-bound digital processing.
The FBR will also transition tax appeals to a faceless format in phases as part of the broader digital transformation of Pakistan’s revenue system.
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