The Federal Board of Revenue (FBR) announced a 1.5 percentage point increase in Pakistan’s tax-to-GDP ratio, which reached 10.6% in FY2025, up from the previous year. This shows progress toward the government’s target of 13% as part of its three-year reform agreement with the International Monetary Fund (IMF).
At a high-level meeting chaired by Prime Minister Shehbaz Sharif to review FBR’s reform agenda, officials informed the PM that the number of tax filers had increased from 4.5 million in FY2024 to over 7.2 million by June 2025.
While PM Sharif acknowledged the positive growth in tax compliance, he emphasised that the government’s focus must remain on deep and sustained reforms to modernise the country’s tax system and ensure sustainability. He highlighted the importance of aligning the tax framework with international standards and involving all stakeholders in the reform process.
FBR officials reported that efforts to formalise the retail sector had contributed an additional Rs45.5 billion in tax revenue compared to the previous year. The integration of the retail sector through FBR’s Point of Sale (POS) system and enhanced enforcement measures were key to this growth.
Further, the FBR’s new “faceless” customs clearance platform, designed to reduce corruption and improve efficiency, was mentioned as an early success. The system is expected to reduce average clearance times from 52 hours to just 12 hours in the next three months.
The FBR also introduced remote case hearings via video links to expedite decisions and reduce in-person interactions. Additionally, a reduction in the weighted average tariff on imports by 2.16% is expected to lower input costs for manufacturers and support industrial growth.
Prime Minister Sharif instructed the FBR to present a comprehensive implementation plan for the next phase of reforms, with specific timelines and restructuring of the agency’s digital wing. He also stressed the importance of expanding the tax base, particularly into the informal sector, and easing the burden on compliant taxpayers.
PM commended the FBR officials for their efforts but reiterated that true reform would require discipline, transparency, and sustained commitment. Senior government officials, including Information Minister Ataullah Tarar, Economic Affairs Minister Ahad Cheema, and Law Minister Azam Nazir Tarar, were present at the meeting.
