Amir Saeed

Integrating digital technologies has become essential for economic growth in the ever-changing global economy. Utilising these technologies can greatly improve Pakistan’s tax-to-GDP ratio – a measure that is essential to the country’s economic growth and stability. The current tax-to-GDP ratio is still very low, reflecting the tax system’s shortcomings. The government should revolutionise its tax collection system, boost compliance, and propel economic growth by adopting digital technologies. Talking to WealthPK, Asim Javed, General Manager of ICT Projects and Systems at NUST, highlighted that better tax administration was one of the main ways that digital technologies could increase the tax-to-GDP ratio. Digital tools that limit human error and streamline operations include automated tax processing and electronic filing systems.

The taxpayers find it simpler to file their returns using electronic systems, and automated processes to ensure accurate and consistent tax assessments and computations. This effectiveness improves the legitimacy and reliability of tax administration in addition to streamlining the tax procedure. He further highlighted that data analytics was a powerful tool in the digital toolkit that could significantly impact tax collection. By analysing large datasets, the tax authorities can gain valuable insights into taxpayer behaviours, income patterns, and economic activities. “With this data, tax evaders can be located, risks can be evaluated more precisely, and audit targets can be more precisely defined. A more strategic approach to tax enforcement and compliance is made possible through improved data analytic capabilities, which raise revenue collection and close the tax gap.”

Asim suggested that digital technologies not only facilitate better administration and compliance, but they could also promote increased financial inclusion. Many people have no access to formal banking, which restricts their ability to participate in the tax base. “By giving people easy access to safe and reliable financial resources, digital financial services like e-wallets and mobile banking can encourage more people to participate in the formal economy. This inclusion promotes economic growth and activity in addition to broadening the tax base.” Talking to WealthPK, Anees Amin, Chief Executive Officer at TechScape Private Limited, said better taxpayer services were made possible through digital technologies, which had a significant advantage.

The taxpayers can easily obtain information about their tax responsibilities, dates, and payment alternatives using online portals and mobile applications. He explained that digital means of payment were also essential to increase the effectiveness of the tax collection system. The use of digital payment platforms would reduce the need for cash payments, which are more difficult to track, and allow for simpler, more secure transactions. He further explained that establishing confidence between tax authorities and taxpayers was facilitated by transparency, as readily available and understandable information increases compliance rates for both people and corporations. Improved revenue collection and increased compliance rates are also correlated with better taxpayer services. He highlighted that the integration of digital technologies into tax processes presents prospects for enhanced accountability and transparency.

It is possible to track tax collections, expenses, and allocations in real-time using digital platforms, which facilitate easier oversight and management of public finances. “Openness on the use of tax funds fosters public confidence and promotes voluntary compliance since people were more inclined to pay their taxes when they perceive a direct return on their investment.” He pointed out that digital technology integration into tax processes is not without difficulties, though. To guarantee the efficient and safe use of new technologies, issues including cybersecurity concerns, infrastructure constraints, and digital literacy must be addressed. “To overcome these obstacles and maximise the advantages of digital transformation, investments in digital infrastructure, strong cybersecurity protocols, and training programs for tax officials and taxpayers are crucial,” he suggested.

Credit: INP-WealthPk