Page 41 - CMA Journal (Nov-Dec 2024)

Focus Section

5) Limited Adoption of Technology: Pakistan’s tax voluntary compliance easier. The Sales Tax E-Refund
administration has been slow to embracing System (FASTER) has improved refund processing
technology-driven solutions. Many key processes, times, encouraging businesses to remain compliant.
including return filing, tax audits, and assessments,
5) Blockchain for Transparency in Transactions:
remain partially manual, leading to higher
Blockchain technology could be introduced to
compliance costs and procedural delays.
improve transparency in tax transactions. Countries
Opportunities through Automation like Estonia and Singapore have successfully
implemented blockchain in tax collection to prevent
1) Digitalization of Tax Systems: Pakistan has fraud and enhance efficiency.
introduced several digital initiatives, including:
6) Taxpayer Facilitation through Mobile
• IRIS System: A platform for e-filing tax returns, Applications: The development of user-friendly
withholding statements, and refunds. mobile apps, such as TAX Asaan, allows taxpayers to
file returns, check withholding tax status, and make
• Point of Sale (POS) Integration: Retailers must payments conveniently. Increasing smartphone
integrate their POS systems with the FBR for
penetration in Pakistan presents an opportunity to
real-time sales tax collection.
improve compliance through mobile solutions.
• Track & Trace System: Implemented in sectors like
tobacco, sugar, cement, and fertilizer to curb tax Global trends in Tax Automation
evasion.
Tax automation is revolutionizing fiscal systems globally,
2) Expansion of the Tax Net Using Data Analytics: driven by advanced technologies such as artificial
The FBR is leveraging artificial intelligence (AI) and intelligence (AI), blockchain, robotic process automation
big data analytics to identify non-filers. With access (RPA), and predictive analytics. These innovations are
to NADRA’s database, bank records, and real estate addressing long-standing issues like inefficiency, fraud,
transactions, authorities can track hidden assets and and compliance gaps.
undeclared income.
1) AI and Machine Learning: AI and machine
3) Automation of Withholding Tax and Invoicing: learning (ML) leverage algorithms to analyze large
The integration of automated withholding tax
datasets, identify patterns, and make decisions with
mechanisms ensures real-time tax collection while minimal human intervention. In taxation, AI
reducing manual intervention. Electronic invoicing
automates audits, detects anomalies, and predicts
(E-invoicing) minimizes underreporting of sales,
ensuring accurate tax calculations. liabilities. It reduces human bias, accelerates
processing, and improves accuracy, making it
4) Enhancing Compliance through Online Portals: essential for modern tax systems.
The introduction of FBR's Maloomat Portal allows
taxpayers to access their financial records, making Estonia’s tax authority uses AI to cross-reference
taxpayer data from banks, employers, and property
registries. If a citizen’s reported income doesn’t
match their bank deposits, the system flags
discrepancies automatically, leading to 98% of tax
filings being audited within minutes, reducing
manual oversight and cutting errors by 30%.
Compliance rates have exceeded 95%. In India, the
Goods and Services Tax Network (GSTN) leverages
AI to process 1.3 billion invoices monthly, matching
supplier and buyer data in real time. This has
reduced tax leakage by ₹500 billion annually and
improved fraud detection by 40% through anomaly
detection algorithms.

2) Blockchain: A decentralized digital ledger that
records transactions immutably, ensuring
transparency, traceability, and security—ideal for
combating fraud. It instills trust in tax systems by
preventing retroactive data manipulation.

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