The Federal Board of Revenue (FBR) has clarified recent reports circulating in the print and digital media about the scrutiny of exporters’ income tax returns. The FBR stated that these reports, suggesting the intent to impose unjust taxation, are incorrect.
“It has come to the notice of the Federal Board of Revenue (FBR) that a letter attributed to the FBR is being circulated on social media, creating an impression that exporters’ income tax returns will be scrutinised with the intent to impose unjust taxation. This impression is incorrect and not based on factual grounds,” the tax authority said.
For clarity, the legal framework governing exporters was amended through the Finance Act, 2024, whereby the regime applicable to exporters was changed from a final tax regime to a minimum tax regime. This change is required to be reflected in the Income Tax Returns for the Tax Year 2025.
The FBR said that to mitigate the possibility of any bona fide or other errors, the field formations were directed to pursue the returns and process them in accordance with the law, wherever any legal inconsistency is identified. Conducting desk audits of returns and ensuring compliance with tax laws is a statutory and primary responsibility of the FBR.
Furthermore, to prevent any inconsistency, misuse or undue inconvenience to taxpayers, this exercise has been initiated under the supervision of the FBR headquarters. The tax body said that it remains committed to fair tax administration, facilitation of taxpayers, and implementation of tax laws in a lawful, transparent and professional manner.
On Thursday, it was reported that the FBR has ordered the scrutiny of tax records for over 480 major exporters after noticing significant reductions in their declared taxable income for Tax Year 2025, following changes in the Income Tax Ordinance through the Finance Act, which transitioned export proceeds from a final tax to a minimum tax regime.
The move has raised alarm within the export community, with industry groups like the Pakistan Business Council and Pakistan Retail Business Council expressing concerns. They argue that this increased scrutiny could deter investment in the already struggling export sector, especially as businesses face rising costs and complex tax burdens.
