FBR Unleashes AI Against Faulty Taxpayers and Consultants

Federal Board of Revenue Chairman Shafqat Mahmood Langrial has issued a stern warning to taxpayers and tax consultants that old methods of underreporting income and exploiting loopholes in the tax system are becoming obsolete. The regulator has adopted artificial intelligence (AI), third-party data, and a faceless assessment system this year, according to Langrial.

He stated that tax consultants, who once considered not only the actual tax liability but also the likelihood of detection by the FBR, are now facing a significant shift. Langrial explained that consultants previously guided clients on the probability of being caught, leading to potential underreporting of tax liabilities. However, with the introduction of AI and improved FBR capabilities to analyze individual returns, the situation has drastically changed.

The FBR now possesses the capacity to scrutinize each return, and third-party data is being utilized to detect discrepancies. Langrial emphasized that the FBR's analytical capacity is now able to evaluate every return, a stark contrast to the past when the regulator had limited resources to examine each submission. Furthermore, Langrial highlighted the implementation of a faceless tax system, signaling the end of personal relationships between taxpayers and FBR officials.

He urged taxpayers to engage in frank discussions with their tax consultants before filing their returns and advised consultants to leverage their tax law knowledge to ensure compliance while avoiding reliance on outdated strategies. Langrial cautioned that taxpayers who continue to use old methods of reducing reported tax liabilities may face unpleasant surprises.

He specifically addressed the September 30 tax return deadline, urging taxpayers to ensure their filings are accurate before submission.