Page 45 - CMA Journal (July-August 2025)

Focus Section

Establishing public–private data-sharing agreements can strengthening the tax base.
also enhance access to financial and transactional
However, technology alone is not sufficient to resolve
information from telecommunication companies, banks,
and utility companies. Moreover, Pakistan should initiate these challenges. Other critical factors—such as a strong
legal framework, public trust, cross-sector collaboration,
a modern system of risk-based compliance to ensure
and institutional readiness—are equally necessary in the
efficiency and effectiveness. This system will replace the
long run. International success stories such as those of
old practice of annual audits. It functions through
India and Estonia have proven that big data analytics,
taxpayer profiling, education, behavioral nudges, and
when combined with political will and strategic alliances,
voluntary e-filing of returns. Implementing a modern
can improve both effectiveness and equity. For Pakistan,
risk-based compliance system will improve tax revenue. the doors are open to build a transparent and sustainable
Lastly, tax reforms will also help harmonize the roles of tax system by integrating data, empowering institutions,
and fostering innovation and commitment.
provincial and federal tax authorities with the support of
strong political will and coordination. In the absence of References:
such will and coordination, tax reform will not achieve its
• Bird, R. M., & Zolt, E. M. (2018). Technology and Taxation in Developing
full potential.
Countries: From Hand to Mouse. UCLA Law Review.
Case Studies / Global Benchmarks • OECD. (2021). Tax Administration 2021: Comparative Information on
OECD and Other Advanced and Emerging Economies.
Worldwide practices establish that data-driven tax
• IMF. (2022). Digitalization and Taxation in Emerging Markets.
guidelines can significantly enhance compliance and
• Baer, K. (2011). Tax Administration and the Small Taxpayer: Building a
revenue growth when supported by institutional will.
Fair, Friendly, and Effective Tax System. IMF Working Paper.
Two notable success stories of data-driven tax systems
• Kloeden, D. (2011). Revenue Administration Reforms in Anglophone
are India and Estonia.
Africa Since the Early 1990s. IMF Technical Notes and Manuals.
In Estonia, 95% of tax returns are filed electronically, with • Ahmed, V., & Ahmed, S. (2021). Tax Reforms in Pakistan: Historic
most of the information pre-filled through a Context, Challenges, and the Way Forward. Pakistan Institute of
government-integrated online system. This was possible Development Economics (PIDE).
because Estonia built one of the world’s most advanced • World Bank. (2022). Pakistan Development Update: Inflation and the
digital tax systems. The system connects data with Poor.
banking records, insurance companies, employment • IMF. (2022). Revenue Administration: Rethinking Data Usage in Tax
records, and even social media transactions, enabling the Compliance.
e-tax board to ensure real-time compliance and audits. • Khwaja, M., Awasthi, R., & Loeprick, J. (2011). Risk-Based Tax Audits:
The system is also administratively optimized through a Approaches and Country Experiences. World Bank.
high level of voluntary compliance (OECD, 2020). • Mascagni, G., Nell, C., & Monkam, N. (2019). One Size Does Not Fit All: A
Field Experiment on Taxpayer Communications in Rwanda. ICTD
Another success story is India’s development of the Working Paper.
Goods and Services Tax Network (GSTN). This system • OECD. (2021). Digital Transformation of Tax Administration: Towards a
collects and reconciles transactions across states. It Tax Administration 3.0. OECD Publishing.
incorporates e-invoicing, automatic matching of input • Jenkins, G. P. (2017). Improving Tax Compliance in Developing
and output tax credits, and red-flagging of doubtful Countries through the Use of Technology. International Centre for Tax
activities. Identity verification is completed through and Development.
Aadhaar and PAN cards, integrating tax systems to • IMF. (2022). Tax Administration Diagnostic Assessment Tool (TADAT):
eliminate fraud and leakage (Purohit, 2021). Strengthening Tax Institutions in Developing Economies.
• World Bank. (2020). Enhancing Tax Systems in the Digital Age.
These success stories highlight that leveraging
data-driven tax systems—supported by reforms, legal • OECD. (2020). Tax Administration 2020: Comparative Information on
frameworks, and institutional coordination—can help OECD and Other Advanced and Emerging Economies.
Pakistan build an effective and modern tax system. • Purohit, M. C. (2021). Reforming GST in India: Issues and Challenges.
National Institute of Public Finance and Policy.
Conclusion
About the Author: The writer is a Fellow Member of ICMA and
Leveraging data for tax reform and revenue acceleration Senior Instructor at the Government College of Commerce, Multan.
has a direct relationship. Pakistan now has a golden With over 20 years of experience in management accounting,
opportunity to address its long-standing problems of tax corporate finance, and taxation, he has taught at various
evasion, a limited tax base, and managerial universities and professional institutes across Pakistan. He
incompetencies. It is essential to adopt a big data previously worked as Assistant Manager Accounts at Orient Group
analytics approach so that tax authorities can shift from a of Companies and is currently a faculty member at ICMA’s Multan
campus while pursuing a PhD. He has authored over nine
reactive to a proactive enforcement strategy. This will publications in national refereed journals and conferences on
make the tax system more efficient and effective by management, leadership, corporate finance, and governance.
expanding compliance, reducing evasion, and
ICMA’s Chartered Management Accountant, Jul-Aug 2025 43