Pakistan launches first AI-powered customs system to curb tax evasion and speed up trade

Dubai: The Federal Board of Revenue (FBR) has launched Pakistan’s first Artificial Intelligence (AI)-driven Customs Clearance and Risk Management System (RMS), aimed at enhancing transparency, accelerating trade, and boosting tax revenue by minimising human intervention in customs operations.

The landmark step is part of the government’s tax reform and digital governance initiative.

The system, developed with support from the Intelligence Bureau (IB), uses AI algorithms and automated bots to analyse and assess the value and classification of imported and exported goods.

It is designed to modernise Pakistan’s customs processes and increase efficiency across ports of entry.

At a high-level meeting to review FBR’s reform initiatives, Pakistan Prime Minister Shehbaz Sharif lauded the efforts of the FBR and IB, emphasising the importance of inter-agency cooperation to strengthen the national economy, APP reported.

“By automating tax and customs systems, we are not only reducing corruption but making revenue collection faster, smarter, and more transparent,” Sharif noted.

Big gains in efficiency

According to the FBR report, initial trials of the AI-powered RMS showed promising outcomes including: 92% improvement in system performance, 83% increase in the identification of Goods Declarations (GDs) for taxation and 2.5x rise in green channel clearances, enabling smoother, faster cargo movement

Officials noted that the system streamlines risk assessment and document verification, allowing for more precise targeting of high-risk shipments and smoother clearance for compliant traders. The move is expected to ease pressure on customs officials, reduce clearance times, and improve the country’s overall ease of doing business.

Under-invoicing

The RMS is also expected to significantly reduce opportunities for under-invoicing and misdeclaration, two key loopholes long exploited to evade duties.

Prime Minister Shehbaz Sharif directed relevant departments to ensure the long-term sustainability and integration of the RMS into national digital infrastructure. He reaffirmed that reforms in the FBR remain a top priority for his government.

Video analytics to detect tax evasion

The meeting also included a briefing on the use of video analytics in manufacturing sectors, another tech-driven initiative by FBR to detect tax evasion in real-time by monitoring production output. Early trials have shown this method to be 98% efficient and highly cost-effective, with potential applications in sectors like beverages, tobacco, and cement.

Rs178 billion recovered

In a separate session, the prime minister reviewed a joint FBR-IB report on the recent anti-tax evasion drive. The report revealed a staggering Rs178 billion recovered through targeted actions and enforcement efforts.

Finance Minister Muhammad Aurangzeb, Information Minister Attaullah Tarar, FBR Chairman Amjad Zubair Tiwana, and senior IB officials were also present during the sessions.