Pakistan to conduct tax audit of top 5% wealthiest individuals

Pakistan's Federal Board of Revenue (FBR) has decided to conduct an audit of high-net-worth individuals whose wealth falls in the top 5% in the country.

The special auditing is crucial given their transactions involving trillions of rupees in purchase and sale of properties, motor vehicle and banking transactions, according to the tax collection body.

The current cadre of 500 auditors at the FBR requires major reinforcement to effectively manage the large-scale audit, which is why 4,000 new auditors will be hired.

The FBR will conduct a 100% computerized audit utilizing risk management models based on national integrated data.

The authority will also execute 70% desk audit compared to 5% last year for low to medium taxpayers incorporating third-party data verification. It will also undertake a 40% comprehensive audit compared to 1% last year for high-risk cases.

Sources informedNukta the FBR has been receiving data from banks and excise offices on a monthly basis and the department can collect billions of rupees in revenue by enhancing enforcement capabilities in response to significant financial activities observed over the past years.

Sources said that the FBR is taking these enforcement measures on the recommendation of consulting firm McKinsey, which is assisting with end-to-end digitisation of the tax authority.