The Federal Board of Revenue (FBR) has initiated consultations with experts to draft legislation aimed at formally introducing cryptocurrency into Pakistan’s financial and tax systems, according to a news report.
The FBR is also considering mechanisms to tax the profits generated from cryptocurrency transactions and the assets created through digital currency deals.
The move follows a complaint filed with the FTO, which asked the FBR to clarify its tax policy concerning cryptocurrencies.
With 560 million digital currency users globally, Pakistan stands as the sixth-largest adopter of cryptocurrency, with approximately nine million users. Despite this growing market, the State Bank of Pakistan (SBP) has not declared cryptocurrencies illegal, though it issued a cautionary circular in 2018 about their risks.
The FTO has raised concerns over the lack of regulation in Pakistan’s cryptocurrency market, where significant commercial transactions occur outside the existing tax framework. This, the FTO argued, points to negligence by the FBR and leaves an unaddressed opportunity for tax revenue.
International best practices, such as those under the Financial Crimes Enforcement Network, treat crypto miners as money transmitters, which subjects them to existing regulations. Without legal provisions in place, profits and assets created through cryptocurrency dealings remain undocumented and untaxed.
The FBR’s Policy Wing has confirmed that this issue is under review in consultation with experts. The FTO has recommended that the FBR engage all relevant stakeholders and incorporate necessary provisions into the upcoming Finance Bill, urging that cryptocurrency regulation be prioritized to broaden Pakistan’s tax base.
