Table of Contents
- Executive Summary: State of the Revenue Authority in 2025
- Key Functions and Mandate of the Pakistani Revenue Authority
- Major Reforms Introduced Since 2023
- Digitalization and Technology Integration in Tax Systems
- Tax Compliance: Challenges and Initiatives
- Revenue Collection: Key Statistics and Performance Metrics
- Legal and Regulatory Framework: Laws, Amendments, and Enforcement
- Stakeholder Impact: Businesses, Individuals, and International Investors
- Future Outlook: 2025–2029 Revenue Projections and Strategic Plans
- Official Resources & Further Reading (e.g., fbr.gov.pk, finance.gov.pk)
- Sources & References
Executive Summary: State of the Revenue Authority in 2025
In 2025, the revenue authority landscape in Pakistan is defined by ongoing reforms, digital transformation, and a continued emphasis on broadening the tax base to support fiscal sustainability. The Federal Board of Revenue (FBR) remains the principal agency responsible for tax administration, including the collection of federal taxes such as income tax, sales tax, and customs duties, while provincial revenue authorities manage services and certain local taxes.
Recent years have seen significant legislative and procedural changes aimed at increasing compliance and reducing the informal economy. The Finance Act, 2024 introduced further measures to enhance documentation requirements, streamline tax processes, and curb tax evasion. The FBR has accelerated the implementation of digital initiatives, such as the Point of Sale (POS) integration for retailers, expansion of the Iris online tax filing system, and the use of automated risk-based audit selection. These efforts are part of a broader digitalization strategy to improve transparency, taxpayer facilitation, and revenue mobilization (Federal Board of Revenue).
Statistically, Pakistan’s tax-to-GDP ratio has remained a challenge, hovering around 9-10% in recent years, which is lower than regional averages. For the fiscal year 2024-25, the government has set an ambitious tax revenue target of PKR 12.97 trillion—a substantial increase from the previous year’s collection. This target reflects the government’s commitment under international financial arrangements and the urgent need to increase fiscal space for development and debt servicing (Ministry of Finance, Government of Pakistan).
Compliance remains a central concern, with ongoing campaigns to bring more individuals and businesses into the tax net. The FBR continues to issue notices to non-filers, improve withholding tax regimes, and collaborate with provincial authorities to share data. Simultaneously, the provincial revenue authorities, such as the Sindh Revenue Board and Punjab Revenue Authority, are intensifying efforts to improve service tax collection and compliance within their jurisdictions (Sindh Revenue Board, Punjab Revenue Authority).
Looking forward, Pakistan’s revenue authorities are expected to deepen reforms focused on digitalization, enforcement, and taxpayer education. Key challenges persist, including informal economic activity, legal disputes, and administrative capacity. However, with international support and sustained policy momentum, the outlook for revenue mobilization and authority strengthening remains cautiously optimistic for 2025 and beyond.
Key Functions and Mandate of the Pakistani Revenue Authority
The revenue authority in Pakistan operates primarily under the aegis of the Federal Board of Revenue (FBR), which is the apex federal agency responsible for tax administration, collection, and enforcement. Established under the Federal Board of Revenue Act, 2007, the FBR’s mandate is shaped by a range of statutes, including the Income Tax Ordinance, 2001, Sales Tax Act, 1990, Federal Excise Act, 2005, and Customs Act, 1969. These laws empower the FBR to assess, collect, and monitor federal taxes and duties, as well as to formulate policy recommendations for the Ministry of Finance.
The FBR’s key functions include:
- Tax Collection and Administration: The FBR is tasked with collecting federal direct and indirect taxes, including income tax, sales tax, federal excise duty, and customs duties. In the fiscal year 2023–24, the FBR collected PKR 9.4 trillion in taxes, reflecting a nearly 30% year-on-year growth, and the target for 2024–25 is set at PKR 12.97 trillion (Federal Board of Revenue).
- Policy Formulation and Implementation: The FBR proposes tax policy changes, drafts regulations, and implements reforms to broaden the tax base, improve compliance, and enhance transparency. It works closely with the Ministry of Finance on fiscal policy matters.
- Enforcement and Compliance: The authority enforces tax laws through audits, investigations, and penalties for non-compliance. The FBR has intensified its digital enforcement strategies, including the integration of the Point of Sale (POS) system and track-and-trace solutions for key sectors (Federal Board of Revenue).
- Anti-Evasion and Anti-Smuggling Operations: The FBR collaborates with Customs and Inland Revenue to combat tax evasion and curb illicit trade. It conducts anti-smuggling operations, especially at border points and in the retail sector.
- Dispute Resolution and Appeals: The FBR provides mechanisms for taxpayers to appeal assessments and resolve disputes, including alternative dispute resolution committees and tribunals.
Looking ahead to 2025 and beyond, the FBR’s mandate is increasingly focused on digitalization, taxpayer facilitation, and broadening the tax net, in line with commitments to the International Monetary Fund (IMF) and domestic economic reforms. Enhanced use of technology, automation of tax processes, and data-driven enforcement are expected to define the authority’s operational strategy over the next few years (Federal Board of Revenue).
Major Reforms Introduced Since 2023
Since 2023, Pakistan’s revenue authorities have implemented a series of significant reforms aimed at broadening the tax base, enhancing compliance, and increasing overall revenue collection. The Federal Board of Revenue (FBR), the central tax authority, has spearheaded these initiatives, often in coordination with provincial revenue boards such as the Punjab Revenue Authority (PRA) and Sindh Revenue Board (SRB).
- Digitalization of Tax Processes: The FBR accelerated its digital transformation by expanding the IRIS platform for e-filing, e-payment, and digital audit selection. In 2024, the launch of the Track & Trace System for tobacco, sugar, cement, and fertilizer sectors became fully operational, aiming to curb tax evasion and improve transparency (Federal Board of Revenue).
- Documentation Drive and Benami Law Enforcement: Enhanced enforcement of the Benami Transactions (Prohibition) Act has targeted unregistered assets, while new rules require broader reporting of bank accounts and business transactions. In 2024, FBR increased scrutiny of real estate and retail sectors for non-compliance (Federal Board of Revenue).
- Broadening the Tax Base: The FBR and provincial authorities have intensified campaigns to register new taxpayers, especially among retailers and service providers. Special focus has been placed on integrating informal sectors through simplified registration schemes and withholding tax regimes (Federal Board of Revenue).
- Sales Tax Harmonization: Coordination between the FBR and provincial revenue boards has improved with the adoption of a single sales tax return for both federal and provincial sales taxes on services, reducing compliance burdens and disputes over jurisdiction (Punjab Revenue Authority).
- Key Statistics: In fiscal year 2023-24, FBR reported a record tax collection of PKR 7.5 trillion, up 17% from the previous year. The tax-to-GDP ratio, however, remains below 10%, signaling ongoing challenges in revenue mobilization (Federal Board of Revenue).
Looking forward to 2025 and beyond, revenue authorities are expected to further automate processes, strengthen data-sharing with other government agencies, and introduce stiffer penalties for non-compliance. These reforms are crucial for meeting fiscal targets agreed with international partners and for improving Pakistan’s long-term economic stability.
Digitalization and Technology Integration in Tax Systems
In recent years, the revenue authority in Pakistan, primarily the Federal Board of Revenue (FBR), has accelerated its digitalization and technology integration initiatives to address persistent challenges in tax collection, compliance, and service delivery. As of 2025, these efforts have become central to Pakistan’s fiscal strategy, aiming to broaden the tax base, enhance transparency, and reduce administrative costs.
A major milestone was the rollout of the FBR’s IRIS platform, a comprehensive online tax filing and management system. The IRIS system allows taxpayers to register, file returns, and manage tax affairs electronically, streamlining processes for both individuals and businesses. In 2024, FBR reported that over 4 million taxpayers were registered on IRIS, a substantial increase compared to previous years, reflecting growing adoption and compliance (Federal Board of Revenue).
Additionally, the FBR has integrated digital payment gateways and point-of-sale (POS) integration for retail sectors, making real-time transaction monitoring feasible. As of early 2025, the FBR’s POS integration covers more than 60,000 retail outlets nationwide, and the authority continues to expand this network to combat underreporting and improve VAT collection (Federal Board of Revenue).
To further boost compliance, FBR launched the Maloomat TaxRay portal, which provides taxpayers with access to third-party information related to their financial activities. This initiative leverages data analytics and cross-agency information sharing, making it increasingly difficult for individuals and entities to under-declare income or assets.
On the legislative front, the introduction of the Finance Act 2024 included amendments mandating electronic invoicing for large taxpayers and certain sectors, with phased implementation planned throughout 2025. The law also provided legal backing for digital audits and remote assessments, further streamlining enforcement and minimizing face-to-face interactions.
Looking ahead, the FBR’s digitalization roadmap for the next few years prioritizes expansion of artificial intelligence for risk-based audits, integration with provincial revenue authorities, and continued simplification of taxpayer interfaces. These measures are projected to increase tax-to-GDP ratio, which currently stands around 9.2%, with government targets aiming to surpass 10% by 2027 (Ministry of Finance, Pakistan). As these reforms mature, Pakistan’s revenue authority is expected to significantly enhance its capacity for tax administration and compliance in the digital age.
Tax Compliance: Challenges and Initiatives
Pakistan’s revenue authority, the Federal Board of Revenue (FBR), is the primary institution responsible for tax collection, enforcement, and compliance management in the country. As of 2025, the FBR faces persistent challenges in broadening the tax base, combating tax evasion, and modernizing administrative processes. Despite incremental reforms, Pakistan’s tax-to-GDP ratio remains comparatively low in the South Asian region, hovering around 9.2% in FY2023, with the government targeting gradual improvement in the subsequent years (Ministry of Finance, Pakistan).
One persistent challenge is the prevalence of the undocumented economy. A significant proportion of economic activity remains outside the formal sector, limiting the effectiveness of tax enforcement. The FBR continues to struggle with detecting concealed incomes and unreported transactions, particularly in sectors such as real estate and retail trade. Furthermore, taxpayer compliance is hindered by complexities in tax laws, perceived harassment, and mistrust in the system. To address these, the FBR has periodically initiated documentation drives and data integration projects, including linking tax records with national identity databases and banking information (Federal Board of Revenue).
On the legislative front, the government has introduced amendments through the Finance Act 2024 and earlier, enhancing powers for digital audits, strengthening penalties for non-compliance, and incentivizing voluntary disclosures (Federal Board of Revenue). Additionally, the implementation of a real-time point-of-sale (POS) integration system in retail businesses is designed to curb underreporting of sales and VAT leakages. As of early 2025, the FBR reports that over 46,000 retailers have been integrated into the POS system, a number expected to grow as compliance enforcement intensifies.
To facilitate compliance, the FBR has expanded e-filing platforms and launched taxpayer assistance programs. These include online portals, mobile apps, and helplines aimed at simplifying filing processes and improving taxpayer outreach. Recent statistics indicate a steady increase in tax filers, with approximately 5.6 million returns filed in Tax Year 2024 compared to 4.7 million the previous year (Federal Board of Revenue).
Looking ahead, Pakistan’s revenue authority is expected to intensify digitization of tax processes, further integrate cross-agency data, and enhance risk-based audits. However, success will hinge on political will, capacity building, and public trust. The ongoing reform agenda, if sustained, could significantly improve compliance and revenue mobilization over the next several years.
Revenue Collection: Key Statistics and Performance Metrics
Pakistan’s revenue authority, the Federal Board of Revenue (FBR), is the chief institution responsible for tax collection and enforcement of fiscal laws at the federal level. For the fiscal year 2024-2025, the FBR has set an ambitious revenue collection target of PKR 12.97 trillion, marking a significant increase from the previous year’s PKR 9.415 trillion. This target reflects the government’s drive to strengthen fiscal sustainability, widen the tax base, and reduce reliance on external borrowing.
As of June 2024, provisional figures indicate that the FBR collected approximately PKR 9.415 trillion in taxes for FY 2023-24, surpassing the original target by around PKR 41 billion. Major contributors included direct taxes (around 45% of total collection), sales tax (38%), customs duty (10%), and federal excise duty (7%). This performance was supported by improved enforcement measures, digitization of tax processes, and policy reforms aimed at curbing tax evasion and broadening the scope of documentation in the economy Federal Board of Revenue.
Compliance remains a core challenge; the overall tax-to-GDP ratio for Pakistan stands at approximately 9.2%, among the lowest in the region. To address this, the FBR has introduced initiatives such as the Track and Trace System for key industries (tobacco, sugar, fertilizer, cement), and expanded the use of Point of Sale (POS) integration for retailers. These steps are designed to minimize leakages and improve real-time monitoring Federal Board of Revenue.
- Registered Taxpayers: As of early 2024, Pakistan had approximately 4.9 million registered income tax filers, a significant increase from just over 2 million five years prior. However, the active filer list still represents a fraction of the country’s working population Federal Board of Revenue.
- Revenue Composition: Direct taxes are gradually increasing as a share of total revenue, a policy goal intended to reduce indirect tax reliance and promote equity.
- Digitalization: The FBR’s ongoing digital transformation, including electronic filing and automated refund systems, is expected to enhance compliance and transparency in the coming years.
Looking ahead to 2025 and beyond, the FBR is expected to continue focusing on broadening the tax base, leveraging technology, and strengthening enforcement. These measures are vital for achieving fiscal targets and supporting Pakistan’s economic stabilization and growth agenda.
Legal and Regulatory Framework: Laws, Amendments, and Enforcement
The legal and regulatory framework governing revenue authorities in Pakistan is anchored primarily in federal statutes and provincial legislation, reflecting the country’s federal structure. The Federal Board of Revenue (FBR) is the chief federal authority responsible for tax administration, while each province operates its own revenue authority for the collection of sales tax on services and other provincial levies. These include the Punjab Revenue Authority (PRA), Sindh Revenue Board (SRB), Khyber Pakhtunkhwa Revenue Authority (KPRA), and Balochistan Revenue Authority (BRA).
At the federal level, the FBR derives its powers from the Federal Board of Revenue Act, 2007, and administers key laws such as the Income Tax Ordinance, 2001, Sales Tax Act, 1990, and Federal Excise Act, 2005. Recent years have seen notable amendments, particularly targeting digitalization, broadening of the tax base, and enhanced enforcement. The SRO 237(I)/2024 introduced further clarifications on sales tax registration and compliance for e-commerce businesses, aiming to improve traceability and tax collection efficiency.
Provincially, the revenue authorities operate under respective laws such as the Punjab Sales Tax on Services Act, 2012, Sindh Sales Tax on Services Act, 2011, and parallel legislation in Khyber Pakhtunkhwa and Balochistan. Amendments in these laws over 2023–2025 focus on harmonization of service tax structures, increased automation, and stricter enforcement mechanisms, including digital invoicing and real-time reporting.
Enforcement is a top priority, with revenue authorities empowered to audit, investigate, and penalize non-compliance. The FBR has launched initiatives such as the IRIS portal for e-filing and taxpayer services, and has expanded the use of data analytics for risk-based audits. In 2024, FBR reported a record revenue collection of PKR 9.4 trillion in the fiscal year, reflecting improved compliance and enforcement strategies (Federal Board of Revenue).
- Key statistics: FBR’s revenue target for FY 2024-25 is set at PKR 12.9 trillion, a 37% increase from the previous year, underlining the government’s focus on fiscal consolidation (Federal Board of Revenue).
- Outlook: The period to 2027 is expected to see continued digital transformation, stricter enforcement, and expanded inter-agency collaboration to curb evasion and enhance revenue mobilization, in line with commitments to international partners and fiscal reform agendas.
Stakeholder Impact: Businesses, Individuals, and International Investors
The evolving landscape of Pakistan’s revenue authority—principally the Federal Board of Revenue (FBR)—has significant implications for businesses, individuals, and international investors in 2025 and the coming years. Recent legislative changes, digitization initiatives, and compliance enforcement are reshaping how different stakeholders interact with the tax system.
- Businesses: Companies operating in Pakistan face heightened scrutiny following the FBR’s continued drive towards broadening the tax base and minimizing evasion. The 2024 Finance Act reinforced transfer pricing regulations and documentation requirements for multinationals, aligning with OECD best practices. The FBR’s “Track and Trace System” for sectors such as tobacco, sugar, fertilizer, and cement is now fully operational, requiring businesses to integrate digital monitoring of production and supply chains. Non-compliance triggers penalties and potential prosecution, with significant increases in audits reported in 2023–24 (Federal Board of Revenue).
- Individuals: For salaried and self-employed individuals, the FBR’s expansion of the digital tax return filing platform (IRIS) and integration with national databases is streamlining compliance, but also increasing detection of non-filers. The 2024–25 budget maintained progressive tax rates, but introduced stricter withholding requirements, especially for non-filers, leading to higher automatic deductions on financial transactions and property transfers (Federal Board of Revenue). The FBR’s data-sharing agreements with NADRA and provincial revenue authorities have enhanced cross-verification, raising the risk of penalties for underreporting.
- International Investors: The FBR has prioritized improving the ease of doing business and transparency to attract foreign direct investment (FDI). Pakistan’s accession to the OECD’s Inclusive Framework on BEPS (Base Erosion and Profit Shifting) has resulted in tighter rules on cross-border transactions and country-by-country reporting for multinational enterprises. The phased reduction in corporate tax rates for certain sectors, along with new incentives in Special Economic Zones, aim to offset compliance burdens. However, investors face increased documentation and transfer pricing scrutiny, especially after the 2024 amendments to the Income Tax Ordinance (Securities and Exchange Commission of Pakistan).
Looking ahead, the FBR’s ongoing digital transformation and focus on transparency are expected to continue intensifying compliance obligations but may ultimately foster a more predictable and equitable tax environment for all stakeholders. The government projects a further increase in tax-to-GDP ratio from 9.2% in FY2024 to 10% by 2026 through these measures (Ministry of Finance, Pakistan).
Future Outlook: 2025–2029 Revenue Projections and Strategic Plans
The future outlook for Pakistan’s revenue authority—primarily the Federal Board of Revenue (FBR)—between 2025 and 2029 is shaped by ambitious reforms, digital transformation, and an intensified focus on broadening the tax base. The FBR, which administers federal taxes such as income tax, sales tax, and customs duties, has established concrete targets for increasing tax-to-GDP ratio and enhancing compliance amid evolving economic dynamics.
Key revenue targets and projections stem from commitments made in recent budget documents and agreements with international partners. For fiscal year 2024–25, the government has set a tax collection target of PKR 12.97 trillion, aiming for a continued increase in subsequent years to support fiscal sustainability and development priorities. The FBR intends to gradually raise the tax-to-GDP ratio from the current estimated 9.2% to 13% by 2029, a goal reiterated in the latest budget policy statements and reform roadmaps (Ministry of Finance).
Strategically, the FBR’s multi-year plan emphasizes digitization, including the nationwide rollout of the “Track and Trace System” for tobacco, sugar, cement, and fertilizer sectors, as well as the expansion of electronic filing and real-time invoice monitoring. These efforts are expected to enhance transparency, curb evasion, and improve taxpayer experience. The authority is also prioritizing the integration of databases across federal and provincial agencies to identify untaxed economic activity—an approach supported by the State Bank of Pakistan and provincial revenue boards.
On the legal front, ongoing amendments to the Income Tax Ordinance 2001, Sales Tax Act 1990, and Customs Act 1969 are expected, with new measures to tighten compliance, strengthen penalties for non-filing, and streamline dispute resolution. The FBR is also working to comply with international standards on anti-money laundering and counter-terrorism financing as outlined by the Financial Action Task Force (FATF).
Despite these efforts, the success of revenue projections remains contingent upon macroeconomic stability, improved documentation of the informal sector, and public trust in the tax system. The FBR’s strategic plans to 2029 reflect a strong commitment to modernization and compliance, but achieving ambitious revenue goals will require sustained political support and institutional capacity building (Federal Board of Revenue).
Official Resources & Further Reading (e.g., fbr.gov.pk, finance.gov.pk)
- Federal Board of Revenue (FBR) – The primary federal agency responsible for taxation, customs, and enforcement of tax laws in Pakistan. Provides tax laws, SROs, circulars, tax collection data, and compliance resources.
- Ministry of Finance, Government of Pakistan – Offers federal budget documents, fiscal policy statements, economic surveys, and updates on government revenue measures and reforms.
- Punjab Revenue Authority – Manages and administers sales tax on services in Punjab province, and shares information on rules, notifications, and tax forms.
- Sindh Revenue Board – Oversees collection of sales tax on services in Sindh, with resources for taxpayers, legal framework, and compliance guidelines.
- Khyber Pakhtunkhwa Revenue Authority – Responsible for collection and administration of sales tax on services in Khyber Pakhtunkhwa, providing news, taxpayer registration, and legal resources.
- Balochistan Revenue Authority – Manages sales tax on services in Balochistan, with resources on tax laws and compliance.
- Securities & Exchange Commission of Pakistan – Regulates corporate and financial sectors, and provides notifications, compliance circulars, and regulatory updates relevant to corporate taxation.
- Lahore High Court and Supreme Court of Pakistan – For access to key judgments and case law related to tax disputes and revenue authority matters.
- Pakistan Tax Authorities Portal (OECD) – For international standards, tax treaties, and cross-border tax cooperation involving Pakistan.
