Pakistan’s tax administration is moving further towards technology-based compliance monitoring. Through the newly introduced section 165AB of the Income Tax Ordinance, 2001, the State Bank of Pakistan has been enabled to establish and operate a secure centralised repository of banking data. Under this framework, banks and electronic money institutions will electronically upload prescribed information relating to account holders whose deposits or withdrawals exceed Rs. 100 million during a reporting period.
A key feature of the mechanism is that the information will initially be subjected to algorithmic cross-matching with tax data. According to the reported amendment, the banking information itself will not be visible to income tax authorities during this automated matching process, thereby incorporating confidentiality safeguards within the system.
Where the system identifies a gross mismatch between banking activity and tax information, the case may be transferred to FBR’s Compliance Risk Management system for further proceedings through the National Faceless Centre. The development signals an increasingly data-driven approach to tax enforcement, making consistency between declared income, turnover, assets and financial transactions more important than ever.