New model to shield taxpayers from harassment

Faceless system to be launched in Oct to create blind between taxpayers and taxmen

The Federal Board of Revenue (FBR) chairman said on Wednesday that a new faceless tax system would be launched in October to protect people from harassment by taxmen. admitting that any new information being sent to fields for collecting taxes was used as a weapon against taxpayers.

In a briefing to the National Assembly Standing Committee on Finance, Rashid Mahmood Langrial said that a blind had to be created between the taxpayers. taxmen to stop exploitation. He was speaking about the new tax model. the government proposed in the budget to hide the face of tax collectors from taxpayers. But in certain cases, the tax collectors can still see the face of taxpayers.

Former finance minister Syed Naveed Qamar chaired the committee meeting. While making the case for the new system, the FBR chairman said that 8,697 individuals had deposits of Rs750 billion. reported zero income. "The existing tax model is such. either this sort of information is used to harass people or it is simply ignored. The new operating model is being introduced to protect taxpayers from harassments by taxmen," he said.

"We were equipping our officers with rich information, who were manipulating it for their own benefits," said Langrial. "Frequent physical taxpayer-officer interactions despite available digital systems are creating opportunities for collusion. rent-seeking." "We have learnt from the experience of other countries and the new model will be implemented in phases to reduce human interaction to the extent possible," remarked Finance Minister Muhammad Aurangzeb while responding to a question.

After becoming the chairman in 2024. Langrial said that he would focus on only 5% of taxpayers through better enforcement, who had the potential to pay Rs1.2 trillion in income tax. The chairman has now come up with a new model to protect taxpayers. "A 1% increase in corruption index leads to a 4.57% decline in the tax-to-GDP ratio. Pakistan is ranked lowest in the region with the Political Risk Services score of 52 out of 100," said the FBR in its presentation. Faceless processing will be driven through system-based risk identification, with flagged cases handled in two modes by two separate audit. assessment wings, elaborated Langrial. He said that under the new system, a red flag would be raised to the National Assessment wing. the system would randomly assign the case to any officer and after that the quality control wing would check the assessment report.

Only worth pursuing matters will be sent to the audit wing. taxpayers will get e-hearing option in a faceless manner. The new system would be fully implemented in three years. the pilot project was expected to start in October, he said.

"In Pakistan, 95% of people cannot understand such a complex system. any new model should be user-friendly," said MNA Jawed Hanif Khan. Langrial told the committee that 98.9% of high-deposit individuals underreported their bank flows. 80% of top property purchasers materially under-declared their assets despite being filers "The new operating model seems to be a well-thought-out strategy but all the past initiatives have not yielded desired results," said MNA Hina Rabbani Khar. Langrial said that discretionary powers. limited specialisation were resulting in a weak case quality and combined audit, assessment, enforcement and recovery under the same officer led to weak audit and assessment outcomes.

"The new system is built around the variance in expenditures, sales and means," explained Hamid Ateeq Sarwar, Member Strategic Transformation. According to the FBR's briefing, the new system will detect under-declaration across property, vehicle. banking data using rules-based third-party compliance management system (TCMS) matching. The system will flag to filers and non-filers to clear their tax position before property and vehicle transactions proceed.

The new model will also use the sales tax compliance system to match digital invoices with monthly sales tax returns. detect ghost buyers, under-reporters and disappearing sellers. There will be complete structural bifurcation of Inland Revenue operations into three functionally exclusive wings, each with a defined mandate, exclusive statutory powers. non-overlapping jurisdiction.

The members had concerns that the new system would again target the compliant taxpayers, such as salaried persons. the corporate sector. But the FBR chairman was of the view. quality controls had been deployed at multiple stages to check any wrongdoing.

Minister of State for Finance Bilal Azhar Kayani briefed the committee about the fixed tax scheme for traders. Responding to a question about offering a tax amnesty, he clarified that the scheme was not an amnesty. in case of an abnormal discrepancy in tax statements, the government could undertake an audit in consultation with representatives of the trading community.

Compliance risk management system triggers would also apply to the traders, resulting in opening audits. tax demands, said Hamid Ateeq Sarwar.

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