FBR plans to use satellite imagery, GIS and GPS technology to detect under-declared properties and expand Pakistan’s tax base.
ISLAMABAD: The Federal Board of Revenue (FBR) is planning to deploy satellite-based technology to identify gaps in income tax collection from immovable properties and improve the detection of under-declared land and buildings.
According to FBR sources, the proposed initiative would use satellite imagery, Geographic Information System (GIS) and Global Positioning System (GPS) technology to identify, classify and assess land and properties for taxation purposes.
Satellite technology to identify under-declared properties
Under the proposal, satellite-based reclassification could help identify commercial and industrial properties in major cities that may have been under-declared for tax purposes.
The technology would allow authorities to map properties more systematically and compare satellite-based information with existing tax records.
According to FBR sources, urban immovable property taxation currently generates less than 0.1 per cent of Pakistan’s GDP, despite an estimated revenue potential of between 0.5 and 1.0 per cent of GDP.
The significant gap between existing collections and estimated potential highlights the scope for improving property tax compliance through better data and identification of taxable assets.
FBR estimates billions in additional revenue
The proposed satellite-based exercise could initially generate between Rs30 billion and Rs60 billion by identifying gaps in property declarations and taxation.
On an annualised basis, revenue generation could increase to between Rs80 billion and Rs150 billion by the 24th month of implementation, according to the sources.
The use of GIS and GPS technology would enable authorities to map and classify properties more systematically.
This could improve the identification of commercial, industrial and other taxable properties that may not be appropriately reflected in existing tax records.
Provincial taxation powers pose challenge
However, the proposed initiative faces a major institutional challenge because taxation of land and immovable property falls within the provincial domain under Pakistan’s constitutional framework.
FBR sources have therefore identified federal-provincial revenue sharing as a key consideration in implementing the proposed technology-based property taxation system.
Coordination between the federal and provincial authorities would be required to determine how information generated through the proposed system could be used and how any additional revenue would be allocated.
FBR seeks to expand tax base through technology
The initiative forms part of broader efforts to expand Pakistan’s tax base by using technology and data to identify previously untapped sources of revenue.
The proposed use of satellite imagery, GIS and GPS technology could give tax authorities a more comprehensive picture of property development and land use in urban areas.
It could also help narrow the gap between actual economic activity and tax collection by identifying properties whose use or classification may not correspond with existing declarations.
If implemented, the initiative would represent another step towards greater use of digital data and technology in Pakistan’s tax administration, while its success would depend on effective coordination between federal and provincial authorities.