Karachi, September 19, 2024 – The Federal Board of Revenue (FBR) has embarked on an extensive audit of properties, motor vehicles, and banking transactions, marking a significant step toward strengthening tax compliance and enforcement across Pakistan.
This large-scale initiative is part of FBR’s broader effort to scrutinize high-value financial activities, with the recruitment of thousands of specialized auditors being a key component of the operation.
In a statement, the FBR confirmed that it has issued a call for expressions of interest from reputable payroll firms to provide qualified auditors. The aim is to fortify its auditing capabilities in response to the massive transactions observed in the last fiscal year. “With transactions amounting to trillions of rupees in the purchase and sale of properties, vehicles, and banking activities, the need for specialized auditing services has never been more pressing,” the FBR emphasized.
Recruitment and Scope of the Audit
Currently, the FBR operates with a cadre of 500 auditors, a number that has proven insufficient to manage the magnitude of financial activity under scrutiny. To address this shortfall, the FBR is seeking to recruit 4,000 highly qualified auditors through professional payroll firms. These auditors will be tasked with executing a comprehensive audit of the top 5% wealthiest individuals in Pakistan, an elite group responsible for significant financial transactions.
According to FBR officials, these audits will be carried out with precision, utilizing advanced risk management models and internationally integrated data systems. The focus will be on ensuring that high-net-worth individuals are accurately reporting their assets and income, as well as verifying that their tax liabilities are fully met.
Audit Strategy and Methods
The FBR has announced an aggressive auditing strategy, significantly increasing the scope of its audits compared to previous years. Under the new initiative, the following steps will be implemented:
1. 100% Computerized Audit: A fully computerized audit system will be deployed to ensure the accuracy and efficiency of the process. This system will leverage risk management models based on international standards, allowing for thorough cross-checks of financial data.
2. 70% Desk Audit: The desk audit portion will focus on low- to medium-risk taxpayers, ensuring that discrepancies are caught early. This represents a dramatic increase from the 5% desk audits conducted last year.
3. 40% Comprehensive Audit: High-risk cases will undergo a meticulous comprehensive audit, with the FBR increasing its audit coverage from just 1% last year to 40% this year. These cases will involve more intensive scrutiny and in-depth investigation.
Contractual Engagement and Future Plans
The initial contract for these auditors is set for one year, with the possibility of further engagement depending on the payroll firms’ performance and capacity to handle the workload. The FBR has also indicated that additional leading payroll firms may be engaged if necessary, ensuring that the project has the resources required to meet its objectives.
This bold move by the FBR signals its determination to close loopholes in the tax system and bring greater accountability to Pakistan’s wealthiest individuals. By expanding its audit activities, the FBR aims to significantly boost tax revenues while ensuring fair and equitable enforcement of tax laws across the country.
