Key Takeaways
- The Federal Board of Revenue (FBR) has introduced a National Faceless Centre (NFC) to digitize tax audits.
- The new system aims to reduce direct interaction between taxpayers and tax officials.
- Cases will be assigned to officers through a computerized, risk-based process.
The Federal Board of Revenue (FBR) has launched a National Faceless Centre (NFC) to digitize tax audits, shifting the process away from direct interaction between taxpayers and tax officials. This move is part of Pakistan’s New Tax Operating Model, approved in principle in June.
Under the new mechanism, audit cases will be identified through a computerized, risk-based process, eliminating the discretion of individual tax officers in selecting cases. Once selected, cases will be automatically assigned to officers located anywhere in the country, ensuring a more centralized and standardized approach.
Taxpayers will no longer be informed about the identity of the officer handling their case, while officers will have no control over which cases are assigned to them. This separation of roles ensures that a single officer will no longer control a taxpayer’s case from the audit stage through to the final decision.
The process will be divided into three stages: one officer will conduct the audit, another will prepare the assessment, and a third will review the work before an order is issued. This ensures a more transparent and accountable system.
Notices, responses, and hearings will be conducted electronically through the FBR’s IRIS system, with physical verification or recovery handled separately by field teams. The Finance Bill provides a legal framework for faceless audits, assessments, and appeals.
The new system is expected to streamline the tax audit process, reduce corruption, and increase efficiency. However, it also raises concerns about the transparency and accountability of the system, as taxpayers will have limited interaction with the officers handling their cases.
The FBR’s decision to implement this new model is part of a broader effort to modernize the tax system and improve compliance. The government hopes that this will lead to a more equitable and efficient tax administration.
While the new system aims to reduce individual discretion, it also introduces a layer of complexity for taxpayers who will need to navigate the digital system. The FBR is expected to provide training and support to taxpayers to help them adapt to the new process.
