FBR Launches Faceless Tax Centre To Audit Up To 400,000 Individuals

The Federal Board of Revenue (FBR) has set up the National Faceless Centre (NFC) in Islamabad, with dedicated faceless wings planned to audit and assess third-party information of between 300,000 and 400,000 individuals under a pilot programme starting in October.

The centre will initially operate with 27 officers and will receive third-party data in phases after preliminary compliance checks are completed.

At the initial stage, the NFC will handle medium-to-individual cases, while corporate entities and associations of persons will remain outside the scope of the new system.

A second phase is scheduled to begin in June 2027, under which audit and assessment functions currently performed by all Regional Tax Offices (RTOs) will be centralised under the new model.

On Friday, the FBR Board in Council, chaired by FBR Chairman Rashid Mahmood Langrial, approved the rules governing the NFC. The rules will take effect from October 1, with the centre operating from the premises of RTO Islamabad.

The initiative is part of Pakistan’s New Tax Operating Model, which received the government’s approval in principle in June this year.

Initially, the NFC will focus entirely on third-party information, particularly data related to air travel and purchases of luxury vehicles and high-value residential properties.

Under the system, individuals will receive notices asking them to explain or provide evidence supporting such significant expenditures.

If a taxpayer can satisfactorily justify the expenditure, the case will be closed. Those unable to provide an explanation will be required to pay the applicable tax and revise their returns. The system will also offer a digital, AI-based facility for making tax payments.

The centralised and faceless structure is intended to remove direct physical interaction between taxpayers and tax officials, with the stated aim of reducing opportunities for corruption and taxpayer harassment.

According to the FBR, similar centralised and faceless tax systems are operating in countries including the UK, Australia, the Netherlands, Singapore and India. India has been using a comparable model since 2019, mainly for individual tax cases.

The FBR said the new system will significantly change how cases selected for audit are processed. Under the previous arrangement, a taxpayer selected for audit generally dealt with a specific tax officer at a particular office, often requiring face-to-face interaction.

Under the faceless model, this direct contact will be removed.

Cases will instead be selected through a computerised, risk-based mechanism rather than by individual tax officers. Once selected, each case will be automatically assigned to an officer who may be located anywhere in Pakistan.

Taxpayers will not be informed of the identity of the officer handling their case, while officers will have no involvement in deciding which cases are assigned to them.

The model will also ensure that one officer cannot control a taxpayer’s case throughout the entire process.

Each case will move through three separate stages. The first officer will conduct the audit, a second officer will carry out the assessment, and a third will review the work for quality before the final order is issued.

The FBR said separating these responsibilities, together with automated case selection and allocation, is intended to minimise direct contact between taxpayers and tax officials while improving the overall audit and assessment process.