Muhammad Saleem

Industrial digitization will positively impact economic growth and expand the tax base. Zia Hussain, an industrialist, told WealthPk that Prime Minister Shehbaz Sharif has directed the authorities to digitize all industrial production processes in order to bring them into the tax net, especially targeting tax defaulters. He said industrialists welcome this decision, as it will broaden the tax net and enable the government to collect funds more efficiently to manage its day-to-day affairs.

He pointed out that the majority of industrialists are already registered taxpayers, contributing significantly to the national exchequer. He emphasized that the Federal Board of Revenue (FBR) should focus on bringing traders, small factories and other currently excluded sectors into the tax system, rather than burdening existing taxpayers. “We know that without digitization, the FBR will not be able to increase revenue. But it should not be a move that disrupts the already fragile business environment.

Industrialists are providing jobs and fetching much-needed forex.” He suggested that the government should engage with real stakeholders to ensure the successful implementation of the plan. Recognizing the rise of artificial intelligence and technological advancements, Zia stressed the need to adopt modern systems such as a track-and-trace digital production system. He said that a similar tracking mechanism should also be put in place at the delivery stage of goods to bring the entire production and supply chain into the tax net.

Farooq Ahmed, a tax consultant, told WealthPk that the track-and-trace digital production system has already been working in the sugar, tobacco, and fertilizer sectors. He said the government is now planning to launch a similar system in the cement and other industries. He raised concerns about how the FBR will keep communication channels open to facilitate the business community and taxpayers throughout this transition.

He emphasized that FBR must improve its image among the business community, many of whom believe that taxpayers’ money is not being spent on public welfare. He acknowledged that digitization will help bring more businesses into the tax net, but stressed that a mechanism must be put in place to protect business owners from potential harassment or exploitation of FBR officials. “If we truly want to achieve our revenue and economic targets,  then the digitization process must be user-friendly and error-free,” he suggested.

Ahsan Ali, a computer programer, said that industrial digitization allows us to apply digital technologies–such as automation, AI, data analytics, and smart machinery– to traditional industries. He noted that advanced technology can effectively replace slow manual processes, ultimately improving both productivity and profits. In Pakistan, he pointed out that most factories still rely on outdated models, which benefits neither the owners nor the national economy.

By embracing digital solutions, these industries can increase productivity, reduce wastage, and improve overall quality, he added. “The process of digitization is like giving an old car a brand-new engine,” he remarked. He emphasized that if Pakistan wants to compete with countries like Vietnam, India, or Bangladesh, it must modernize its industrial base. Digitization, he claimed, holds the potential to connect local industries with global supply chains. He said that a narrow tax base is one of Pakistan’s biggest economic problems. Records show that only a small fraction of businesses pay their fair share.

However, with digitization, companies' transactions will become more visible and easier to track, he added. “With digital billing, e-payments, and inventory systems, businesses can maintain a proper record of sales and income, making it much harder to sweep things under the rug. He said that digitization would help the FBR monitor business activities and detect tax evasion more efficiently. So yes, we can say that digitization–indirectly and, in some cases, directly—helps grow the tax base and strengthen the economy,” he claimed.

Credit: INP-WealthPk