FBR Lacks Capacity to Detect Tax Evasion Using Big Data: Report

The Federal Board of Revenue (FBR) lacks the capacity to analyze big data to detect tax evasion, according to a new report issued by the FBR.

The Annual Performance Report (2020-21) revealed that the functional data bridges have been established with provincial revenue agencies and other state departments across the nation such as banks, National Database and Registration Authority (NADRA), Securities & Exchange Commission of Pakistan (SECP), Punjab Information Technology Board (PITB), Accountant General Pakistan Revenues (AGPR), State Bank of Pakistan (SBP), 1LINK, telcos and Punjab Land Record.

It said that FBR lacks the capacity to analyze big data to detect tax evasion. It noted that the development of information and communication technologies (ICT) infrastructure and a well-resourced data analysis and research unit to integrate and analyze big data with adequate data security can pave the way for enhancing the capacity of the organization.

The Annual Performance Report said that the donor agencies and internal drivers have highlighted the need for development of the ICT infrastructure and technical skills to integrate and analyze big data with adequate data security. In this perspective, FBR aims to be a smart, modern and fair tax organization. The aim is to promote voluntary tax compliance through transparent policies and an efficient user-friendly tax system.

The report said that domestic revenue mobilization is key to realizing sustainable development and providing fiscal space to fund public expenditures. The current Tax reforms aim at business development and an investment-friendly environment through voluntary tax compliance and reduction in administrative and compliance costs for taxpayers, which will ultimately promote economic growth.

According to the report, the FBR reforms have focused on the integration of third-party databases of NADRA, SBP, AGPR and the provincial governments with FBR’s centralized databases and a single system for filing of sales tax returns for the federal and provincial taxes.

The report said that FBR has been analyzing various reform interventions such as simplification, technological access, facilitation & communication, automation of business processes, effective compliance controls and enforcement of taxpayer obligations and institutional development to increase efficiency and accountability.

FBR is innovating to maximize the quality and efficiency of its services. In line with the government policy of enhancing automation, FBR is upgrading its digital services to make them increasingly available to all taxpayers and traders. Realignment of all ICT services with a special focus on security, user interfaces with taxpayers and tax collectors, analytics and a comprehensive Management Information System (MIS) is the need of the hour, the FBR report concluded.

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