FBR issues super tax recovery notices, targets Rs327 billion from large firms

The Federal Board of Revenue (FBR) has stepped up recovery of super tax following the Federal Constitutional Court’s ruling, with field formations issuing notices to large taxpayers and total collections estimated at Rs327 billion.

According to tax officials, recovery notices amounting to more than Rs200 billion were issued on Thursday, as Large Taxpayers’ Offices, Medium Taxpayers’ Offices and Corporate Tax Offices began computing super tax liabilities of companies falling under their respective jurisdictions. Thousands of taxpayers are expected to fall within the scope of the levy following the court’s decision.

In several cases, notices were served during the day, while calculations continued in others. Some demands were issued under section 138(1) of the Income Tax Ordinance, 2001, relating to tax year 2023.

Overall recovery under the super tax head is expected to reach Rs327 billion. Of this amount, around Rs90 billion is projected to come from oil and gas exploration companies, which are already subject to effective tax rates ranging between 44% and 55%. Officials said the law does not allow taxation beyond the agreed limits applicable to these companies.

The FBR has begun direct engagement with major corporate taxpayers and aims to recover around Rs100 billion in the coming months as part of the initial phase of enforcement. The International Monetary Fund has also been informed of the court’s ruling and the steps being taken to implement it.

Recovery notices issued by field formations warned that failure to pay outstanding dues could lead to coercive measures, including attachment and sale of movable and immovable property, appointment of receivers, and arrest and detention for up to six months, in line with the Income Tax Ordinance.

The notices also stated that non-payment may be justified only if the demand has been deleted through appeal, is subject to a pending rectification application, or has already been paid or adjusted against refunds. Taxpayers not covered by these conditions have been directed to clear liabilities by the due date, failing which recovery proceedings may be initiated under section 140 of the ordinance.

Earlier, the Federal Constitutional Court upheld the constitutional validity of sections 4B and 4C of the Income Tax Ordinance. The court dismissed taxpayers’ appeals, ruling that section 4B constitutes a valid tax under the Constitution and that section 4C was lawfully enacted and applicable to the relevant tax years.