Islamabad: In its latest review, the International Monetary Fund (IMF) has acknowledged significant progress in Pakistan’s ongoing tax reforms, projecting that total tax revenue will reach 12.6% of the country’s gross domestic product (GDP) in the fiscal year 2024-25—up from the originally targeted 12.3%. The revised forecast reflects growing revenue mobilization efforts by the Federal Board of Revenue (FBR), including litigation recoveries, expanded digital monitoring, and stronger enforcement actions.
According to the IMF’s “First Review under the Extended Fund Facility (EFF)” report, the FBR’s tax collection is expected to hit 10.7% of GDP in 2024-25, slightly above the initial goal of 10.6%. Direct taxes are forecast at 4.8% of GDP, while sales tax will contribute 3.7%, Federal Excise Duty (0.9%), and customs duty (1.3%). Non-tax revenue is projected to reach 3.3% of GDP, up from the 3.0% target.
A major component of the projected gains is the anticipated recovery of Rs367 billion from litigation cases—part of a broader Rs770 billion under dispute. These include pending cases in the Supreme Court (Rs43 billion), High Courts (Rs217 billion), and the Appellate Tribunal Inland Revenue (Rs104 billion). The government has assured the IMF that efforts are underway to resolve most of these disputes by May 2025.
The IMF praised initiatives such as higher withholding taxes on unregistered retailers, which contributed to a 51% year-on-year increase in tax filers among retailers and a 38% rise in those with actual tax liabilities as of January 2025.
A significant legislative move is the proposed elimination of the “non-filer” category. If approved, non-filers would be barred from major economic transactions such as real estate and vehicle purchases—a major step toward broadening the tax base.
The Tajir Dost scheme, aimed at small traders, was noted as underperforming, prompting the government to introduce new monitoring targets for this group. Meanwhile, all provinces have now passed Agricultural Income Tax laws, applicable from January 2025, with enforcement strategies due by June.
The FBR is enhancing its compliance risk management (CRM) systems, which are now active in Large Taxpayer Offices in Islamabad, Karachi, and Lahore, and expanding to Corporate Tax Units. These systems will integrate third-party data to improve audit targeting.
Revenue enforcement will also focus on monitoring sales tax irregularities, import anomalies, and high-risk sectors such as retail, real estate, and corporates. The FBR is expected to expand the Point-of-Sale (POS) system and increase customs surveillance, particularly in smuggling-prone regions.
Pakistan’s annual tax revenue losses from illicit trade and smuggling are estimated at Rs750 billion, according to recent reports. The IMF has urged the government to sustain its anti-smuggling campaigns and digital monitoring tools to reduce revenue leakages.
The report underscores that Pakistan’s long-term fiscal stability hinges on continued reforms, improved enforcement, and the resolution of legal ambiguities around tax policy. The government has committed to presenting a robust economic plan in the FY26 budget, based on stakeholder consultations and ongoing structural improvements.
Samra Zulfiqar, a real estate analyst at Zameen.com, is passionate about finding projects that offer buyers the best returns. Her keen insights spotlight the market’s most promising opportunities.
