Page 25 - CMA Journal (May-Jun 2026)

F oc us S ec t ion

Examples of digital reforms such as Faceless Customs any unusual patterns that might constitute a tax Barriers to Implementation in Pakistan must be addressed to achieve a successful
Assessment FCA demonstrate the potential impact of evasion/money laundering event, something that a implementation, including the development of policy
digital reforms in Pakistan, where reducing physical conventional tax detection system couldn't detect. In However, there are several challenges that hinder the and institutional capacity. In this regard AI must be
interactions and paperwork could enhance trade and addition, Large Language Models LLM like TaxTajweez implementation of AI-driven tax and audit systems in seen as a strategic reform that aims to establish a more
increase revenue e ciency (Nasir, 2026). Digital record show the potential to increase the e ectiveness of tax Pakistan. Lack of good digital infrastructure, such as accountable, responsive, and e cient system of public
keeping systems are more accurate and immutable for compliance by o ering precise and relevant guidance, the poor quality of broadband internet access, and nancial governance, based on international best
tax data collection, increasing transparency and which in turn would decrease compliance pressures outdated hardware, hinders the scalability of practices. Further studies are needed on the ongoing
minimizing the risk of tampering with tax data to and boost voluntary compliance (Mohammad A an cutting-edge technological solutions (unde ned & AI initiatives in Pakistan to assess their long-term
Introduction with monitoring rather defraud the tax system. Digital systems can be used to Habib et al., 2024). Shepel, 2024). One of the critical issues is cybersecurity impacts on tax compliance, audit e ciency, and scal
and data privacy, as the inclusion of nancial
Digital technologies are now becoming part of the than veri cation being optimize and digitalize routine compliance monitoring Comparative Analysis: Traditional vs information means it needs to be secured to ensure it is results.
tasks, and help tax authorities focus their resources on
the priority. The current
emerging economies' scal architecture in public operational framework more high-risk cases (Ahmed, 2024). Also, the AI-Based Tax and Audit Systems not compromised and maintains public trust (Umbet References
nancial management. The high level of tax evasion has been characterized reduction of human touch in the normal processes will et al., 2025). Entangled in a web of institutional • Ahmed, E. R. (2024). Impact of Digital Procedures in Accounting and Auditing on Tax
and low tax to GDP ratio in Pakistan has made it all the by a lack of integrated contribute to minimize the risk of corruption and The table below enumerates the major di erences interests and without strategic vision, institutional Collection E ciency. Acta Academiae Beregsasiensis. Economics(6), 300-306.
https://doi.org/10.58423/2786-6742/2024-6-300-306
more important to have e ective tax administration data governance, with enhance the level of public trust in tax system fairness between the conventional and AI tax and audit resistance to change is another obstacle to progress. • Ayyadurai, R., Maamra, O. E., Praseptiawan, M., Kanimozhi, R., & Soundarraj, K. (2026).
and audit mechanism (Rasheed et al., 2024). The data from customs, (Pali & Rama, 2025). systems and the advantages of digital tax and audit Moreover, there is a shortage of data science and Developing a technology-driven simulation model for integrating nance, auditing,
accounting, and taxation in emerging economies. African Journal of Science,
Federal Board of Revenue (FBR), and the Auditor inland revenue and systems in improving transparency and e ciency. AI-related skilled human resources in the public sector. Technology, Innovation and Development, 1-17. https://doi.org/10.1080/
20421338.2026.2659633
General of Pakistan (AGP) are two cornerstones of scal provincial tax authorities Application of Arti cial Intelligence in International Best Practices Another signi cant concern is data incompleteness, • Azenzoul, A., Mahouat, N., Vandapuye, S., Slimane, S. N., Jbene, M., & Mokhlis, K. (2026).
governance, but their isolated institutional not being easily linked Tax and Audit Systems where disparate data silos make it di cult to perform a From Predictive Accuracy to Algorithmic Justice: Mapping the Multidimensional Impact
of AI in Tax Auditing. Journal of Risk and Financial Management, 19(5), 354.
frameworks, manual approaches, and absence of a together and missing AI has been widely adopted by the tax administration thorough analysis needed for e ective AI application. https://doi.org/10.3390/jrfm19050354
common data environment puts the traditional way of elements in The digitization revolution is not the only revolution industry, with the OECD countries and emerging Policy Recommendations • Technologies: Trends and Implications. Journal of Risk and Financial Management,
Belahouaoui, R., & Alm, J. (2025). Tax Fraud Detection Using Arti cial Intelligence-Based
work at risk (Ayyadurai et al., 2026). Many businesses comprehensive taxpayer that's taking place with Arti cial Intelligence (AI) in tax economies having a high level of AI adoption. The 18(9), 502. https://doi.org/10.3390/jrfm18090502
Fajardo, B., & Neiva, S. (2025). ‘Malha Fina de Convênios’: an AI application for auditing
are now transitioning to a digital- rst strategy, and one pro ling (Rasheed et al., and audit. Machine learning algorithms, deep learning OECD Tax Administration 3.0 framework is focused on The following policy recommendations will address • in the Brazilian federal government. Public Money & Management, 1-12.
adaptable AI monitoring to improve compliance and
way to achieve more transparency, increase 2024). networks and natural language processing (NLP) are detection processes (Belahouaoui & Alm, 2025). The these issues, and will help put the advantages of AI and https://doi.org/10.1080/09540962.2025.2499704
examples of AI technologies that assist with proactive
Hassan, B. (2018). Do Tax Audits Contribute to Tax Revenue and Deter Tax Evasion? – An
compliance and improve revenue collection is to use adoption of AI-powered analytics in India has not only digital systems into practice. First, integrating the FBR • Exploratory Study of Tax Audits in Pakistan. Asia-Paci c Tax Bulletin, 24(6).
Arti cial Intelligence (AI). The academic literature in Challenges in Traditional Tax and Audit fraud detection and determining which risks to audit. enhanced the e ciency of GST compliance but also and AGP databases is essential to ensure that there is https://doi.org/10.59403/nnpxkz
Supervised machine learning models such as random
Kinanti, K. A., Chandra, Y. A., & Suyono, A. P. (2025). Digital Integration In Tax Systems:
recent years has emphasized the potential of Mechanisms forest models can help improve e ciency and reduce helped mitigate fraud, providing Pakistan with lessons one scal database which enables the tax-payers to be • Literature Review On Enhancing E ciency And Ensuring Compliance. Assets : Jurnal
implementing AI-powered systems for better processing expenses in the audit while irregularity in on how to seamlessly connect various tax systems pro led as a whole and for audit purposes (Ayyadurai Ilmiah Ilmu Akuntansi, Keuangan dan Pajak, 9(1), 30-54. https://doi.org/10.30741/
assets.v9i1.1508
detection, to reduce the risk of mistakes by humans in The existing tax and audit framework in Pakistan is nancial transactions can be detected. The more the (Rathi & et al., 2021). Likewise, Brazil's ‘Malha Fina de et al., 2026). Second, there is a need to invest in the • Mohammad A an Habib, u., Shehryar Amin, u., Muhammad Oqba, u., Sameer Jaipal, u.,
the process, and to make it conducive to algorithmic plagued with numerous challenges, jeopardizing scal tax authorities are able to predict tax compliance Convênios’ algorithm uses supervised machine adoption of AI and big data analytics, including Muhammad Junaid Khan, u., & Abdul Samad, u. (2024). TaxTajweez: A Large Language
Model-based Chatbot for Income Tax Information In Pakistan Using Retrieval
responsibility, following the OECD Tax Administration integrity. One of the main challenges is that tax evasion patterns and the revenue streams the more quickly learning to audit federal transfers, resulting in marked predictive modelling, machine learning tools to detect Augmented Generation (RAG). The International FLAIRS Conference Proceedings,
3.0 blueprint (Belahouaoui & Alm, 2025). The article is common and the informal economy is signi cant, and e ectively they can take action to identify e ciencies and cost savings. The highlights from these fraud and assess risk. Third, there is a need for extensive • 37.https://doi.org/10.32473/ airs.37.1.135648
Nasir, J. (2026). Impact of Digitalization on Trade Facilitation and Revenue: Evidence
analyzes both tax and audit systems in Pakistan and outside the formal regulatory framework to a large potential tax compliance concerns before they even foreign cases demonstrate the need for strong digital data science and cybersecurity capacity building and from Pakistan. Global Trade and Customs Journal, 21, 71-82. https://doi.org/10.54648/
their current state, as well as the transformative power extent. Manual auditing processes are ine cient, become issues, and take appropriate action. infrastructure, inter-agency data exchange, and training to bolster existing sta as well as hire of data • gtcj2026008
Nasira Perveen, u., & Ashfaq Ahmad, u. (2022). Tax Technology, Fairness Perception and
of AI and digitalization, and suggests policy prone to human error and subject to discretion Furthermore, the anomaly detection systems can investment in AI technologies for impactful scal science and cybersecurity specialists. To safeguard Tax Compliance among Individual Taxpayers. Audit and Accounting Review, 2(2).
https://doi.org/10.32350/aar.22.05
recommendations for incorporating these exercised by tax o cials (unde ned & Shepel, 2024), process a vast amount of data in real-time, and warn of reforms. sensitive information and promote responsible use of • Pali, A., & Rama, S. (2025). Digital Transformation and Its Impact on Public Services: The
technologies to boost and enhance public nance and empirical evidence in Pakistan shows that AI, it is essential to adopt more stringent cybersecurity Case of the Tax Administration Services. Interdisciplinary Journal of Research and
traditional tax audits have contributed little to direct
Development, 12, 40. https://doi.org/10.56345/ijrdv12n1s106
governance in Pakistan. tax collection and have not been successful in having a measures and set up data governance protocols. Last • Rasheed, S., Dr. Milhan Afzal Khan, u., Ijaz, I., Musa Khan, M., & Arshad, M. N. (2024).
but not least, the public-private partnership (P3)
Overview of Existing Tax and Audit signi cant impact on the deterrence of tax evasion approach can be used to speed up the digital ANALYSIS OF CORDA IMPLEMENTATION IN TAXATION SYSTEM OF PAKISTAN: A
PERMISSIONED BLOCKCHAIN FRAMEWORK. Pakistan Journal of Scienti c Research,
4(1), 61-67. https://doi.org/10.57041/pjosr.v4i1.1019
Systems in Pakistan because of their limited scope and reactive nature. In transformation and to tap the private sector's expertise • Rathi, A., & et al. (2021). A Study on Application of Arti cial Intelligence and Machine
addition, data is fragmented across di erent and innovations to provide suitable solutions in Learning in Indian Taxation System. Psychology and Education Journal, 58(2),
The Federal Board of Revenue (FBR) administers the departments of the government, which makes it hard Pakistan's scal environment. • 1226-1233. https://doi.org/10.17762/pae.v58i2.2265
Umbet, M., Askarov, D., Rudžionienė, K., Christauskas, Č., & Alikulova, L. (2025).
federal taxes such as income tax, sales tax and customs for the FBR to have a single and complete picture of Evaluating the Implementation of Information Technology Audit Systems Within Tax
duties. The AGP, on its part, is responsible for the taxpayer activities, and make it di cult to compare Conclusion Administration: A Risk Governance Perspective for Enhancing Digital Fiscal Integrity.
Journal of Risk and Financial Management, 18(8), 422. https://doi.org/
auditing of public sector entities for scal income sources and nd any discrepancies. Financial The use of digital technologies and Arti cial • 10.3390/jrfm18080422
unde ned, u., & Shepel, I. (2024). DIGITALIZATION OF TAX AUDITS: NEW APPROACHES
accountability and legislative oversight (Usman, 2023). data is not monitored in real-time, which makes it AND TECHNOLOGIES FOR IMPROVING CONTROL. Black Sea Economic Studies(90).
Traditionally, these institutions have not been di cult to detect anomalies in nancial transactions Intelligence (AI) in tax and audit procedures o ers a • https://doi.org/10.32782/bses.90-12
improve
to
chance
valuable
transparency,
Usman, M. (2023). Evaluation of the Citizen Participatory Audit by the Department of
technologically interoperable. The FBR has adopted years after they happen, making them less e ective at e ectiveness, and scal integrity in the public nancial the Auditor General of Pakistan. Sayıştay Dergisi(129), 201-233.
digital measures like introducing an online portal for correcting issues (Ahmed, 2024). management system in Pakistan. Institutions like the • https://doi.org/10.52836/sayistay.1319323
Vistro, D. M., Farooq, M. S., Rehman, A. U., & Khan, M. A. (2021). Fraud Prevention in
taxpayer registration, ling of returns, and processing Federal Board of Revenue (FBR) and the Auditor Taxation System of Pakistan Using Blockchain Technology. Atlantis Highlights in
of payments called IRIS (Mohammad A an Habib et al., Role of Digitalization in Tax General of Pakistan (AGP) can increase revenue Computer Sciences. https://doi.org/10.2991/ahis.k.210913.074
2024). IRIS has also enabled the basic e- ling functions, Administration collection, minimize tax evasion losses and boost About the Authors: Mr. Abdul Qayyum is a seasoned finance leader
and the system is primarily used as a repository of les Digitalization is the building block for modernizing the public con dence in government institutions by with over 15 years of diversified experience across construction, FMCG,
manufacturing, and multinational environments in the Middle East and
rather than a smart, predictive analytics tool (Kinanti et tax administration. Reduction of manual work through moving away from the traditional manual process and South Asia and is a Fellow Member of ICMA. Currently serving as Group
al., 2025). Likewise, the AGP audit processes are largely the use of digital tools such as e- ling, e-payment and introducing AI-based, risk-based methods. However, Finance Manager at Lootah Group, UAE, he specializes in IFRS compliance,
financial controlling, digital transformation, ERP implementation, and
manual and are mostly conducted after the automated data processing, cuts down on enabling policy measures, such as Data integration, strategic business partnering. His expertise spans financial governance,
expenditure has been made, rather than in real-time, administrative work. infrastructural, technical and organizational challenges cost optimization, VAT implementation, and performance management,
contributing to sustainable growth and operational excellence.
ICMA’s Chartered Management Accountant, May-Jun 2026 23