Budget 2026-27 Taxation Top stories July 1, 2026Hamza Shahnawaz Amendment to Income Tax Ordinance establishes centralized banking data repository for algorithm-based tax compliance checks ISLAMABAD: The Finance Act, 2026 has significantly strengthened Pakistan’s digital tax enforcement framework by empowering the State Bank of Pakistan (SBP) to establish a centralized repository of banking data and share financial information relating to high-risk persons with the Federal Board of Revenue (FBR). The amendment to Section 175AA of the Income Tax Ordinance, 2001 expands the legal framework governing the exchange of banking and tax information by inserting a new clause authorising the SBP to establish, operate and maintain a secure virtual repository of banking records. The measure forms part of the government’s broader strategy to use technology, automated analytics and digital data matching to improve tax compliance, detect concealed income and strengthen documentation of the economy. SBP to maintain centralized banking repository Through the Finance Act, 2026, Parliament inserted clause (c) into Section 175AA, authorising the SBP to establish, operate and maintain a secure centralized virtual repository containing banking records and financial transaction data maintained by scheduled banks. The repository will maintain banking information linked through unique identifiers, enabling algorithm-based matching of financial data with taxpayers’ declarations. Under the amended law, the SBP will collect, process and provide relevant data and analytical results to the FBR in accordance with procedures prescribed by the Board. Enhanced exchange of banking and tax information Section 175AA already permits the FBR to share tax declaration information with scheduled banks for algorithmic verification. Banks are required to compare tax declarations with their own banking records and identify cases where financial information does not correspond with the prescribed algorithms. With the insertion of the new clause, the SBP assumes a central role by creating the technological infrastructure required to consolidate banking information and facilitate secure…