Artificial intelligence to drive new tax model

Finance Minister Muhammad Aurangzeb on Tuesday said Pakistan's tax administration is moving toward an artificial intelligence (AI)-driven operating model that will significantly reduce direct interaction between tax officials and taxpayers.

 

Speaking at a banking summit in Karachi, the minister said Parliament has approved a new tax administration framework under which AI-powered systems will automate key processes, including the issuance of tax notices. The initiative aims to improve efficiency, transparency, and compliance while minimizing human intervention.

 

Aurangzeb also outlined the government's plans to expand its presence in international capital markets. He said Pakistan is preparing to issue additional Eurobonds and Sukuk, along with the country's first dollar-settled, rupee-linked bonds. Requests for proposals (RFPs) have already been issued to international investors to gauge market demand and pricing.

 

He noted that Pakistan successfully returned to the international bond market after a four-year absence, raising $750 million through a Eurobond after strong investor demand enabled the government to increase the original issue size. He added that the successful launch of Pakistan's inaugural Panda Bond in China's financial market was another important milestone, with the yuan-denominated bond attracting subscriptions exceeding five times the target amount.

 

Discussing capital markets, the finance minister said the long-term health of the Pakistan Stock Exchange (PSX) should be measured by underlying market activity rather than index levels alone. He highlighted rising investor participation, growing interest from Generation Z investors, and the return of double-digit corporate profitability.

 

Commenting on the federal budget, Aurangzeb said it was the first to be led by the Tax Policy Office following its transfer to the Finance Division. He said the government's priorities include export-led growth, rationalisation of advance and super taxes, affordable financing for businesses, and continuation of tariff reforms.

 

The minister emphasized that the banking sector will play a central role in Pakistan's transition from economic stabilisation to sustainable growth by expanding financing for small and medium-sized enterprises (SMEs), exporters, agriculture, manufacturing, construction, and information technology.

 

Pakistan Banks Association Chairman Zafar Masood said the banking sector contributes more than Rs1 trillion annually in taxes and has significantly increased financing to priority sectors. According to him, agricultural lending has risen by 39% over the past year, housing finance by 90%, SME lending by 111%, and the total amount extended to SMEs by around 80% year-on-year.