ISLAMABAD: The Federal Board of Revenue (FBR) has announced plans to hire 102 sector specialists and audit experts across 42 key industries as part of its strategy to enhance field audits, strengthen oversight, and improve tax compliance in Pakistan’s major economic sectors.

Targeted Industries

The recruitment drive will cover a wide range of industries, including automotive, aviation, banking, beverages, cement, ceramics, chemicals, coal, departmental stores, edible oil, education, electronics, fertilizers, flour mills, food imports, IT, manufacturing, paper and packaging, plastics, poultry, power, real estate, restaurants and marquees, rice mills, services, sugar, tea, telecom, textiles, and tobacco.

Phase-One Priority Sectors

In the initial phase, audits will focus on priority sectors such as:

• Automobiles

• Textiles

• Iron and steel

• Independent power producers (IPPs) and distribution companies (DISCOs)

• Pharmaceuticals

• Finance and insurance

• Banking

• Sugar

• Chemicals and fertilizers

• Real estate and construction

• Petroleum and lubricants

• Cement

• Telecommunications

• Tobacco

Selection Process

The FBR will engage human resource firms to provide qualified audit mentors and sector experts. A dedicated Selection Committee will evaluate candidates from a shortlisted pool, with interviews conducted either in person or virtually.

Objectives and Impact

This initiative is aimed at tightening audit controls, curbing tax evasion, and ensuring greater compliance across Pakistan’s most significant industries. By leveraging specialized expertise, the FBR seeks to improve transparency and efficiency in its audit processes.

Additional Regulatory Changes

Separately, the FBR has amended income tax regulations for the fiscal year 2025–26 to broaden the tax base and discourage non-compliance. Under the updated rules, non-filers withdrawing more than Rs50,000 per day from bank accounts will be subject to a 0.8% withholding tax, up from the previous 0.6%. The move is intended to discourage undocumented cash transactions and encourage individuals to file tax returns.

Tax Rule Reforms Mandate Electronic Invoice Integration with FBR System

ISLAMABAD: The Federal Board of Revenue (FBR) has introduced major amendments to the Sales Tax Rules 2006, strengthening measures against tax fraud and ensuring transparency through electronic invoicing. The changes include empowering commissioners to suspend sales tax registrations over fake invoices and mandating system integration for electronic invoices.

Suspension of Registration for Fake Invoices

Under the revised rules, a commissioner with jurisdiction can suspend a taxpayer’s sales tax registration—without prior notice—if there is sufficient evidence of issuing fake invoices, evading tax, or committing tax fraud as defined in clause (37) of section 2 of the Sales Tax Act.

Grounds for such suspension may include:

• The taxpayer not existing at their declared address

• Refusal to allow access to business premises or to provide records as required under Sections 25, 37, 40B, or 40C

• Business turnover exceeding five times the declared capital and liabilities

• Purchasing from or supplying to a suspended taxpayer for more than 10% of transactions in a month (subject to exceptions and value thresholds)

• Failure to file sales tax returns for three consecutive months, or filing null returns for six months

• Direct involvement in tax fraud

• Any other reason specified by the Board

Suspensions will remain in place pending further inquiry.

Enhanced Reporting for Manufacturers and Traders

The amendments also introduce stricter reporting requirements:

• Manufacturers of taxable goods must submit, in Annex-J of their monthly return, details of goods manufactured, produced, and supplied.

• Commercial importers, distributors, and wholesalers must report, in Annex-H1 of their monthly return, details of goods purchased or imported, along with details of goods supplied.

Mandatory Electronic Invoicing Integration

The updated rules require all registered persons to integrate their invoicing systems—whether hardware or software—with the FBR’s computerized platform for issuing and transmitting electronic sales tax invoices. Integration must be done through a licensed integrator or by other prescribed methods under the rules.

The FBR will notify the relevant registered persons or categories of taxpayers through the official Gazette. Those who have already integrated their point-of-sale systems with the FBR are considered compliant under the new provisions.

These changes mark a significant step toward digitalizing Pakistan’s tax system, reducing fraudulent practices, and ensuring accurate, real-time reporting of taxable transactions.

ISLAMABAD: The Federal Board of Revenue (FBR) and Pakistan Revenue Automation (Pvt.) Limited (PRAL) have reaffirmed their commitment to providing uninterrupted tax administration and advanced digital services for taxpayers across the country.

As part of FBR’s ongoing digital transformation strategy, it has been decided to restructure PRAL into a modern, state-of-the-art organization. The upgraded entity will offer enhanced functionality, greater financial autonomy, and cutting-edge technological solutions, ensuring a world-class experience for both FBR and taxpayers.

FBR emphasized that PRAL’s current operations will continue without any disruption during the transition period. All existing systems, services, and support channels will remain fully functional, guaranteeing smooth service delivery to stakeholders.

The transformation will be implemented gradually and in a well-coordinated manner, maintaining stability for employees, users, and customers at every stage.

Acknowledging the dedication and expertise of the PRAL team, FBR stated that their role will be pivotal in shaping the next phase of Pakistan’s digital tax infrastructure—an infrastructure designed to meet global best practices and ensure the country’s tax systems remain secure, efficient, and future-ready.

Pakistan PM Rejects Tax Target Revision, Reaffirms Commitment to Reform Timeline

August 5, 2025

In a bold move signaling fiscal resolve, Prime Minister Muhammad Shehbaz Sharif has ruled out any revision to Pakistan’s ambitious tax collection target set for the fiscal year 2025-26, despite rising economic and political pressure. The PM’s announcement comes as part of a broader effort to reaffirm Pakistan’s commitment to structural reforms under its agreement with the International Monetary Fund (IMF).

No Backing Down from Tax Collection Goals

Speaking at a high-level economic briefing, the Prime Minister made it clear that the government will not scale back from the tax collection target of PKR 13 trillion, which was set in line with the recently approved federal budget. He emphasized that these targets are essential for reducing the fiscal deficit, managing rising debt, and creating fiscal space for development spending.

“We are not only sticking to the tax target—we are accelerating our reforms. There is no room for complacency,” the PM said.

The Federal Board of Revenue (FBR) has already initiated a series of aggressive steps, including expansion of the tax net, digitization of tax processes, and stricter enforcement against non-filers and tax evaders.

IMF Agreement at the Core

Pakistan is currently under a $7 billion IMF Extended Fund Facility (EFF) program, which hinges on the country’s ability to meet strict fiscal and structural benchmarks. These include tax-to-GDP ratio improvements, energy sector reforms, and reductions in circular debt.

The IMF has insisted on widening the tax base, eliminating exemptions, and increasing tax compliance. Any deviation from these reforms could jeopardize the inflow of critical funds from multilateral donors and lenders, especially at a time when Pakistan is struggling to stabilize its balance of payments.

Reform Timeline Reaffirmed

The Prime Minister also reaffirmed the government’s commitment to a strict reform timeline. Key milestones over the next 12 months include:

• Implementation of track-and-trace systems in all major sectors

• Rolling out electronic invoicing systems for retailers

• Gradual phasing out of untargeted subsidies

• Strengthening of fiscal federalism through better coordination with provinces

According to Finance Ministry sources, several laws are also being drafted to tighten tax enforcement, make documentation of the economy mandatory, and penalize large-scale tax evasion.

Business Community Reacts

The business community has shown mixed reactions. While some applaud the government’s focus on long-term sustainability, others express concern over the short-term impact on businesses already burdened by inflation and energy costs.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to couple its tax drive with facilitation measures, especially for small and medium enterprises (SMEs).

“We support reform but want the government to ensure that compliance is easy, transparent, and fair,” said an FPCCI spokesperson.

A Delicate Balancing Act

With inflation still hovering above 18% and foreign exchange reserves under pressure, the road ahead is challenging. But the Prime Minister’s latest statement indicates that the government is willing to make tough decisions now in hopes of building long-term macroeconomic stability.

The next quarterly IMF review, scheduled for October 2025, will be a critical litmus test for the government’s fiscal performance and reform implementation.

Pakistan’s Electric Vehicle Support NEW Policies, Subsidies & Tax Perks

Pakistan is charging ahead with electric mobility through its National Electric Vehicle (NEV) Policy 2025–30, introducing bold incentives to accelerate EV adoption across the country.

For fiscal year 2025–26, the government has allocated a Rs 9 billion subsidy, covering 116,053 electric motorcycles, 3,171 electric rickshaws, and reserving 25% of subsidies for women buyers. Electric car buyers will also receive Rs 15,000 per kWh of battery capacity, reducing upfront costs significantly.

Tax incentives include just 1% sales tax on locally assembled EVs, zero customs duties on EV parts, and no registration fees or excise duty, making EVs far more affordable for consumers.

To support growing demand, the policy promises 40 charging stations along major motorways, battery swapping stations for two- and three-wheelers, and mandatory EV charging points in new buildings. A 45% reduction in electricity tariffs for EV charging further lowers running costs.

Pakistan is also boosting local manufacturing, with 90% of e-bike parts already made locally and international companies like BYD setting up assembly plants, targeting production by mid-2026.

The NEV Policy aims for 30% EV sales by 2030 and 90% adoption by 2040, potentially saving Rs 800 billion in fuel imports. While challenges remain—like policy clarity on used EV imports—the roadmap signals a strong commitment to a cleaner, more sustainable future.

Pakistan’s E-Commerce Sector Faces Strain Under New Digital Tax Rules

Pakistan’s e-commerce sector is under pressure following the government’s implementation of new digital taxes introduced in the 2025 federal budget.

The revised policy imposes a 2% digital tax on all online sales, including those made through websites, apps, and marketplaces—regardless of whether transactions are completed via digital payment or cash on delivery (CoD). Additionally, non-tax-filer sellers are now subject to increased withholding tax of 2%, deducted by courier companies and payment gateways.

Small businesses and home-based sellers, especially those relying on CoD, are struggling to absorb the added cost. Industry stakeholders warn this could discourage digital entrepreneurship and hurt job creation.

Meanwhile, the government’s recent rollback of a 5% tax on foreign e-commerce platforms has drawn criticism, with local sellers calling it a move that favors global players over domestic businesses.

E-commerce associations are urging the government to review the tax structure, simplify compliance, and support smaller sellers during the transition.

Despite the challenges, Pakistan’s e-commerce market—valued at over Rs 2.2 trillion—continues to show growth potential. But experts say balanced, inclusive policies are key to ensuring its long-term success.

FBR Forms Seven-Member Committee to Resolve Tax Dispute in Gilgit-Baltistan

GILGIT: The Federal Board of Revenue (FBR) has established a seven-member high-level committee to address the escalating tax dispute in Gilgit-Baltistan (GB), where traders have been protesting for ten consecutive days.

The protest, led by traders involved in Pakistan-China trade via the Khunjerab Pass, is centered at Sost Dry Port. Demonstrators have blocked the Karakoram Highway — the only land route between Pakistan and China — demanding an end to federal taxes on goods imported from China. They argue that these taxes are unfairly imposed on the people of GB, who should be exempt from such levies.

As a result of the sit-in, cross-border trade and travel have been effectively suspended, leaving thousands of travelers stranded, including a significant number of Chinese nationals. The protesters cite the FBR’s alleged discriminatory policies and delays in clearing imported consignments as major causes of concern.

In response, the FBR issued a notification announcing the formation of a committee tasked with reviewing the grievances of GB residents. Specifically, the committee will examine the application of sales tax, income tax, and federal excise duty on goods imported through Khunjerab Pass for consumption within the region.

The committee comprises top FBR officials, including the Member Customs (Operations), Member Inland Revenue (Policy), Director General (R&A), Chief Collector (North), Chief IR (Policy), and the Secretary Finance of Gilgit-Baltistan.

According to the notification, the committee’s key responsibilities include:

• Assessing the legality and impact of federal taxes on goods consumed in GB

• Designing a transparent mechanism to implement any applicable tax exemptions

• Recommending safeguards to prevent misuse of exemptions

• Identifying relevant HS codes and estimating annual import quantities based on GB’s consumption needs

• Proposing improved customs clearance processes at Sost Dry Port and enforcement mechanisms at Khunjerab Pass to ensure that exempted goods remain within GB

The committee will also consult with local stakeholders to explore alternatives, such as allowing the GB government to collect duties and taxes. A report with findings and recommendations is expected within seven days.

Meanwhile, the situation on the ground remains tense. Trade has ground to a halt, and passengers — including Chinese citizens attempting to return to Xinjiang via the Khunjerab Pass — remain stranded. Some of these travelers have also joined the protest in Sost, demanding immediate restoration of transport services and resolution of the dispute.

ISLAMABAD: The Federal Board of Revenue (FBR) has officially suspended the Digital Presence Proceeds Tax effective July 1, 2025, as part of Pakistan’s efforts to finalize a significant trade agreement with the United States.

The decision, announced through an FBR notification on Wednesday, aims to remove the 5% tax previously imposed on goods and services supplied digitally from foreign sellers. The move is seen as a strategic concession to promote smoother trade relations and boost Pakistan’s export potential.

Finance Minister Muhammad Aurangzeb, along with senior government officials, is currently in Washington, D.C., negotiating the final terms of the trade pact. According to sources, the agreement could enhance Pakistan’s export volume by several billion dollars, offering a competitive edge over regional players such as India, Bangladesh, and Vietnam.

READ ALSO: Govt Removes Tax on Platforms Like Temu, SHEIN, AliExpress

The FBR notification clarified that the suspended tax will no longer apply to any digitally ordered goods or services supplied from outside Pakistan that were previously chargeable under the Digital Presence Proceeds Act.

“This notification shall come into force from July 1, 2025,” the document stated, confirming that the tax will be discontinued for the foreseeable future.

This policy reversal has been widely welcomed by e-commerce users and digital trade stakeholders, who had raised concerns over the impact of such taxes on international purchases and small businesses.

In the wake of the announcement, trade through platforms like Temu, SHEIN, and AliExpress is expected to resume with greater ease, benefiting both Pakistani consumers and foreign online retailers.

Meanwhile, travelers and importers have expressed optimism over the broader implications of the trade negotiations, which could open new avenues for economic cooperation and digital commerce.

FBR Increases Limit on Deferred Sales Tax Refunds for Exporters Under FASTER System

By News Desk

The Federal Board of Revenue (FBR) has increased the upper limit for deferred sales tax refunds under the FASTER system, allowing exporters outside the five major export sectors to claim refunds up to 10% of their export value.

According to fresh instructions issued to FBR field formations, the new cap applies to all exporters not falling within the five core export-oriented sectors. The decision follows the issuance of SRO 1507(I)/2024 and is aimed at improving the efficiency and consistency of the refund process.

Previously, refund caps varied between 2% and 8% depending on the nature of the exporters’ finished products. The revised policy now standardizes the limit, enabling broader access to refunds and facilitating ease of doing business for non-core export sectors.

Under the updated mechanism, the maximum allowable refund will be the lesser of two amounts: 10% of the declared export value or the actual input tax incurred on exported goods. This approach is intended to balance facilitation with tax compliance.

The adjustment marks a significant policy shift toward a more transparent and predictable sales tax refund framework for exporters not traditionally prioritized in earlier FBR refund policies.

FBR Assigns Additional Charge of Member Inland Revenue Operations Post

July 28, 2025 | Islamabad

The Federal Board of Revenue (FBR) has entrusted additional responsibilities to a senior officer, signaling strategic adjustments in its top management. In a notification issued on Monday, Mohammad Iqbal, a BS-22 officer of the Inland Revenue Service, has been assigned the additional charge of Member Inland Revenue (IR) Operations, alongside his existing role as Member (Admin/HR) at FBR Headquarters, Islamabad.

While the FBR has not disclosed the reasons behind the dual charge, the move comes amid growing speculation about possible leadership changes within the organization, including rumors of a potential replacement of the current FBR Chairman.

Mohammad Iqbal is widely acknowledged for his contributions to administrative reforms and human resource development within the FBR. His expanded responsibilities are viewed as a strategic step to maintain operational continuity and stability in Inland Revenue affairs during a crucial phase for the tax authority.

The development coincides with a recent wave of senior-level promotions within the FBR. Seven senior officers were elevated to BS-22 grade, the highest rank in the civil service, in recognition of their outstanding service across the Inland Revenue and Customs departments. These promotions align with the government’s broader agenda to strengthen institutional leadership and enhance revenue mobilization.

Among the recently promoted officials is Dr. Hamid Ateeq Sarwar, who previously served as Member IR – Operations. His leadership played a key role in shaping enforcement and revenue collection strategies. With Mohammad Iqbal now overseeing the IR Operations portfolio, the FBR aims to ensure policy continuity and sustained progress in tax administration.

As part of its broader reforms, the FBR continues to bolster its senior management structure, focusing on governance, compliance, and digital transformation to modernize Pakistan’s tax system and drive fiscal growth.