Aurangzeb tells Senate body: Faceless system to end corruption of tax machinery

ISLAMABAD: Finance Minister Muhammad Aurangzeb Sunday informed the Senate Standing Committee on Finance that the discretionary powers of the Inland Revenue officials in the field formations would be taken away under the proposed National Faceless System to end collusion and corrupt practices in the tax machinery.

During the review of the Finance Bill 2026 at the Senate Standing Committee on Finance here on Sunday at the Parliament House, Finance Minister informed the committee that the Directorate General (Field Compliance), Inland Revenue would be created to deal with the digital non-compliance in the field formations.

READ ALSO: ‘Faceless’ system to modernise sales tax enforcement: expert

There should be minimum human intervention while dealing with the cases of tax officials. It is a fact that even agents and advisers in private sectors have played their role in collusion under the existing tax system, he regretted.

However, Federal Board of Revenue (FBR) Member (Strategic Transformation) Dr Hamid Ateeq Sarwar Sunday expressed full confidence in the proposed National Faceless System Inland Revenue and Directorate General (Field Compliance) to take away discretionary powers of the tax officials in the field formations and would result in immediate removal of IR officials from cement and sugar factories after production monitoring, digital eye and other digital initiatives.

Explaining the details of the “National faceless center”, Dr Hamid Ateeq Sarwar, FBR Member (Strategic Transformation) informed Senate Standing Committee on Finance that the powers of the tax officials would be curtailed under the new concept of faceless assessment on the sales tax side. The Audit and Adjudication functions would be separated to avoid exercising all powers by a single official in the field formations. To avoid collusion, the official engaged in audit of the taxpayer would not be allowed to do assessment of the same taxpayer. Similarly, final order against the taxpayer would be passed by another official.

The chances of corruption would be drastically reduced by at least 75 percent after implementation of the faceless system in coming years, he added.

However, FBR officials informed the committee that the proposed faceless tax system would automatically assign taxpayers’ cases through algorithms to the field officers.

The Finance Bill also proposes the introduction of faceless audit and assessment systems under which all tax proceedings would be carried out electronically. Officials said the system would eliminate direct interaction between tax officers and taxpayers and help curb corruption and human interference.

Officials added that orders issued by officers working in the Faceless Centre would not be challengeable on the basis of multiple jurisdictions, although physical verification of businesses, assets and investments would continue.

Under the faceless jurisdiction, the audit of Karachi based taxpayer would be done by an official stationed at Lahore and Lahore based taxpayer may be assigned an official from Karachi.

The committee held an extensive discussion on FBR’s proposal to establish a National Faceless Centre and introduce a faceless audit and assessment system. According to FBR officials, taxpayer cases will be assigned through automated algorithms, audits and assessments will be conducted electronically and direct interaction between tax officers and taxpayers will be significantly reduced.

FBR Member informed the committee that the proposed system seeks to separate audit functions from assessment functions and minimise opportunities for corruption. He stated that all tax transactions are proposed to be conducted electronically and that the identity of officers operating within the faceless system would remain confidential.

Senator Sherry Rehman expressed concerns regarding the practical implementation of the proposal, particularly in view of connectivity challenges.

Senator Talha Mahmood questioned the transition from conventional enforcement mechanisms, asking, “What did we do before the automated system?”

Finance Minister stated informed the committee that the government’s objective was to reduce excessive human intervention while maintaining effective oversight.

He further stated, “Our effort is to minimise human intervention,” while emphasising that powers were being restructured to improve efficiency and transparency.

Senator Saleem Mandviwala questioned the effectiveness of faceless operations where field enforcement remained necessary.

On the issue of creation of Directorate General (Field Compliance), Inland Revenue, FBR Member (Strategic Transformation) stated that the officials would be exclusively assigned to physically check the production monitoring cameras, point of sales connections and digital eye at the manufacturing premises.

However, Sherry Rehman expressed concern that the new system could increase harassment and create difficulties for taxpayers due to Pakistan’s internet connectivity problems. She remarked that taxpayers would continue to face difficulties whenever internet services were disrupted.

She noted that she had personally visited a shop in Islamabad where the Point-of-Sale system was not functioning due to internet problem.

FBR Member responded that the FBR has currently deployed Inland Revenue officers at 84 sugar mills and cement factories. These officials must be removed from business premises and production monitoring system would replace the system.

The officials of the Directorate General (Field Compliance) would go immediately to the unit where there are issues in cameras or POS system or integration to resolve the issue. Equipped with body cameras, the officials would check connectively, as well as, cameras installed at the outlets/ units, etc. The whole process would be recorded to avoid any harassment or collusion. “We want to remove tax officials from cement and sugar factories,” he added.

To a question, FBR Member said that around 1000 sealing of units were done during last one year.

The new system will effectively deal with the enforcement functions of the 500 Inland Revenue officials in the field formations, he added.

Finance Minister said the allocation of 5G spectrum was intended to improve internet speeds and stressed that end-to-end digitalisation did not mean the complete elimination of human involvement. Referring to his banking experience, he said automated systems were used in banks for generating reports, but the analysis is always done by banking officials.

Following the discussion, the committee approved the proposal for the establishment of the National Faceless Centre.

Copyright Business Recorder, 2026