FBR to strengthen tax audits with third party industry experts and data specialists

To enhance tax enforcement and curb revenue leakages, Pakistan’s Federal Board of Revenue (FBR) is revamping its auditing operations by hiring industry experts, data scientists, and seasoned audit mentors through a third-party HR firm, according to an official document.

This initiative aims to modernize the tax administration and bolster compliance measures across key economic sectors.

By integrating sector-specific knowledge and cutting-edge data analytics, FBR hopes to refine audit strategies and ensure more accurate tax assessments in an increasingly complex financial landscape, an official said.

FBR has set remuneration rates at PKR 60,000 per day for audit mentors, while sectoral experts are expected to receive between PKR 50,000 and 80,000 per day. The estimated financial impact of these hires amounts to PKR 348 million for the current fiscal year, increasing to PKR 1.3 billion in the next.

As Pakistan’s primary tax-collecting authority, the FBR oversees the implementation of federal taxes, including income tax, sales tax, federal excise duty, and customs duty, in accordance with prevailing laws.

To strengthen its auditing processes, the department now seeks to enlist an HR firm that can supply experienced professionals for these critical roles.

Audit Mentors: Strengthening Oversight

To enhance the department’s auditing capabilities, the FBR intends to bring on experienced professionals who will mentor auditors, helping them refine their skills and ensuring adherence to tax regulations. These mentors will provide guidance on conducting audits effectively in alignment with national tax laws.

Sectoral Experts: Specialized Industry Insight

The FBR plans to onboard specialists from various industries to assist its Field Formations in detecting revenue leakages within specific sectors. These experts will help devise strategies to curb tax evasion, utilizing their deep knowledge of sector-specific practices.

Industry experts will play a key role in refining tax compliance mechanisms through sector-specific audits and the development of analytical benchmarks.

Their responsibilities include:

• Tax Analysis: Identifying risks and compliance challenges unique to different industries.
• Benchmarking: Establishing input-output ratios for sectors based on financial accounting standards.
• Audit Support: Assisting in value-chain mapping, detecting tax leakages, and interpreting financial statements.
• Policy Recommendations: Providing insights on industry trends and tax policy adjustments to improve oversight.

The valuation experts will support the Directorates of Post Clearance Audit by ensuring accurate customs valuation for imported and exported goods, while sector risk analysts will focus on identifying risks within industries such as steel, chemicals, leather, food, textile, machinery, and pharmaceuticals. Their expertise will aid customs compliance efforts and audit processes.

Additionally, a data scientist will be tasked with analyzing import/export transactions using business intelligence (BI) and artificial intelligence (AI) tools. By detecting anomalies and patterns, they will provide actionable insights to bolster audit efficiency.

Through these initiatives, the FBR aims to improve its operational effectiveness, refine its tax collection methodologies, and strengthen compliance across multiple sectors.