KARACHI – The federal government has taken a major step toward transforming and modernizing the country’s tax system, as Federal Board of Revenue (FBR) started begun preparations to introduce new digital monitoring and artificial intelligence (AI)-based tax system.
The proposal is likely to be included in the upcoming Finance Bill 2026. The new AI-based intelligent tax system will automatically track down taxpayers’ returns in depth. This advanced system will be capable of instantly detecting incorrect information, underreporting of income, and suspicious financial transactions.
The technology is expected to expose weaknesses in the tax structure and will strongly target major financial crimes such as tax fraud, fake declarations, and under-invoicing, ensuring rapid identification and action against such activities.
FBR officials said that this revolutionary digital system will not only help curb tax evasion but will also lead to a significant increase in national revenue collection. In addition, various proposals are under consideration to reduce the tax gap and strengthen enforcement of tax laws.
It has further been reported that a detailed review of tax enforcement measures will be conducted before the Finance Bill 2026–27, while strategies are also being developed to strengthen modern surveillance systems aimed at eliminating smuggling and financial irregularities.
Experts believe that the use of artificial intelligence will mark a new era for Pakistan’s tax system by increasing transparency, reducing human intervention, and significantly improving revenue collection, potentially serving as a major milestone toward economic stability.
Several countries around the world are adopting AI and advanced data analytics to strengthen tax enforcement, detect evasion, and boost revenue collection, marking a major shift toward digital taxation systems.
Australia, Greece, India, US, UK, France, Spain, the Netherlands, and Singapore are already using AI-driven tools to improve compliance and identify financial irregularities. These systems analyze large datasets to flag underreported income, detect fraudulent claims, uncover hidden assets, and support risk-based audits.
Tax authorities use machine learning to improve audit selection and detect suspicious filings. Greece introduced AI-powered satellite imaging to identify undeclared properties, while India uses big data systems to cross-check financial records and expose tax fraud networks. European countries, including the UK, France, and Spain, rely on AI for fraud detection and monitoring of VAT and income discrepancies, while Singapore focuses on precision-based risk assessment for audits.
More than two third of global tax administrations now use some form of AI or machine learning, primarily for fraud detection, risk scoring, automated audits, and revenue forecasting.
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