IN June 2026, Prime Minister Shehbaz Sharif approved a New Tax Operating Model — launched this month — to adopt a centralised, digital ‘faceless’ system that replaces individual tax officers with one that has sweeping authority over taxpayers’ cases. Cases will be allocated via an algorithm, and the hearings will move online. The goal is to end direct, discretionary contact between officials and taxpayers, which has long been accused of harassment, bribery, and outright collusion.

It remained only a policy announcement until the Finance Bill 2026, which took effect on July 1, 2026, gave the model legal force by amending the Sales Tax Act, the Income Tax Ordinance, and the Customs Act. But the amendments did not create any new or required procedural rights for taxpayers specific to the faceless context and routed existing appeal mechanisms, adopting whatever weaknesses and strengths they already had.

This reform responds to a serious problem, as the FBR cites in support of the plan: 8,697 individuals holding a combined Rs750 billion in bank deposits reported zero income. Centralisation of audit selection through an algorithm is a defensible response to this reality. But this reform leaves one question unanswered: if a business is assessed, penalised, or denied a refund under an algorithmic case allocation system, what does the business get in return? What does due process look like when an anonymous unit makes the decision?

It is tempting to view a ‘faceless’ system as the equivalent of a ‘fair’ system. This improvement is genuine and welcome, as most complaints filed on the Pakistan Citizen’s Portal show just how badly things work for ordinary taxpayers. Digitising the process is reasonable. But discretion does not disappear when a human officer is replaced with a case-routing algorithm or by a distant unit. It moves from visible to invisible discretion — the latter is embedded in a data model and the design choices of whoever built the Central Data Hub. Face-to-face corruption can be witnessed, but corruption embedded in a black-box algorithm can be denied and hidden.

Corruption embedded in an algorithm can remain hidden.

If Pakistan wants this reform actually to deliver justice rather than merely relocate discretion, several elements must be added. They should not be optional extras; they should form the core of the reform.

The right to information and reasons: A specific and substantive explanation must be given to every business that is assessed by the National Assessment Wing about why a demand was raised. The final assessment order must lay out the facts and reasoning in enough detail for the taxpayer to contest it rather than guess at it.

A real and timely right to appeal: The reform proposes that the FBR will retain the authority to move tax appeals to a faceless format in phases. The sequencing matters, because an appeals system that remains slow, paper-based, and subject to the same information asymmetries as the assessment stage will reproduce the old system at one level up.

Contestability of the algorithm, not just the outcome: It is essential to assess whether independent oversight bodies, such as the Finance Committee, can examine whether the model is biased and systematically flags certain sectors, cities, or business sizes unfairly. An algorithm that cannot be audited by anyone outside the tax authorities is simply discretion in technical disguise.

Proportionate treatment of small businesses: While a large corporate taxpayer is well-equip­ped and resourced enough to navigate a digital, document-heavy, and faceless system, a small trader who already struggles with e-filing or an entrepreneur who doesn’t have enough funds is not. If the Field Operation Wing’s facilitation role is under-resourced compared with its enforcement role, the new system will benefit only taxpayers who can afford professional representation. This will perpetuate the same unevenness and continuity of injustice that the reform was meant to fix.

None of this argues against digitising the tax administration, but Pakistan does not merely need a faceless tax administration. It needs a new system with transparency obligations and accountability that a human face, however imperfect, is in a position to provide. The new system also needs to build enforceable rights for the taxpayer. This will determine whether the reform is remembered as genuine modernisation or as the moment when discretion in Pakistan’s tax system simply learnt to hide better.

The writer is a law student at Lums with research interests in gender, AI and public policy.

Published in Dawn, October 14th, 2026