IMF–PAKISTAN TECHNICAL TALKS: FOCUS ON REVENUE GAPS AND LEGAL BOTTLENECKS
The International Monetary Fund (IMF) has pressed Pakistan to explain persistent revenue shortfalls and delays in resolving tax litigation worth over Rs 170 billion. During technical-level discussions, the IMF questioned the Federal Board of Revenue (FBR) about missing last year’s Rs 12.9 trillion tax target and the slow pace of court decisions on super tax and other cases. While the FBR highlighted progress such as an increase in tax-to-GDP ratio to 10.5%, the Fund remains concerned that structural weaknesses, legal disputes, and sluggish economic growth are preventing Pakistan from meeting program goals.
SUPER TAX CASE DECISION: FBR EYES RS 200 BILLION WINDFALL
Pakistan’s revenue plan is now heavily tied to the pending Supreme Court verdict on super tax cases. The FBR has informed the IMF that if the court rules in its favor, it could immediately recover nearly Rs 200 billion to bridge the fiscal gap. Conversely, an adverse decision would require the government to introduce new measures worth Rs 180–200 billion, potentially including enforcement actions or a new flood levy. The outcome of this case is therefore critical, both for Pakistan’s fiscal stability and for the IMF’s confidence in the government’s ability to deliver on revenue commitments.
INCOME TAX RETURN FORM 2025: CLARIFICATIONS AMID CONTROVERSY
The FBR has clarified that no official amendments have been made to the Income Tax Return Form 2025 for the declaration of asset values. However, confusion erupted after the sudden appearance of a new option “Estimated Current Market Value” which forced nearly 250,000 taxpayers to resubmit their returns. Tax bar associations have strongly protested, citing unnecessary compliance burdens and technical flaws in the IRIS system. In response to public complaints, the Federal Tax Ombudsman (FTO) has launched an investigation into whether the last-minute changes were legally justified.
WEALTH STATEMENT AMENDMENTS: LEGAL AND COMPLIANCE CONCERNS
The insertion of “Estimated Current Market Value” into the wealth statement form has triggered a serious legal debate. Experts argue that this requirement is inconsistent with section 116 of the Income Tax Ordinance, 2001, which bases wealth statements on cost rather than subjective valuations. The FTO has ordered top FBR officials to explain why the format was altered just days before the September 30 deadline, warning that such actions expose taxpayers to harassment, litigation, and confusion. Industrial and business communities have also expressed alarm, stating that abrupt changes undermine trust and create unnecessary hurdles for compliant taxpayers.
EXTENDED DEADLINES FOR SALES TAX REGISTRATION AND E-INVOICING
To provide businesses more time for compliance, the FBR has extended deadlines for sales tax registration and electronic invoicing integration. Public companies and importers must now complete registration by October 15, 2025, with testing by October 25 and mandatory e-invoicing from November 1. Individuals and AOPs with turnover above Rs 100 million must register by October 10, 2025, while smaller businesses have until December 10, 2025. These phased deadlines aim to ease the transition into digital invoicing, though businesses continue to report technical challenges in system integration.
KARACHI PORT SCANDAL: RESTRICTED STEEL CONSIGNMENT ILLEGALLY RELEASED
A major breach has been reported at Karachi Port where a terminal operator allegedly released a restricted consignment of prime-quality steel coils despite an active customs hold order. The consignment, misdeclared as “secondary quality steel,” was estimated to cause a revenue loss of Rs23.7 million. Customs authorities have issued a show-cause notice to the terminal operator and warned of possible license cancellation under the Customs Act, 1969. This incident highlights systemic weaknesses in cargo monitoring and has sparked concerns about entrenched smuggling networks operating through transshipment hubs.
NEW CUSTOMS RISK MANAGEMENT SYSTEM: FOCUS ON SMUGGLING AND CURRENCY FLOWS
The FBR has formally established the Directorate of Customs Intelligence and Risk Management, headquartered in Islamabad with regional offices across major cities. This directorate will oversee smuggling prevention, money laundering detection, and risk management in imports and exports. It will also operate a Cross-Border Currency Movement Wing to curb illegal cash flows. The restructuring is part of a broader effort to modernize customs operations, integrate intelligence systems, and strengthen compliance mechanisms nationwide.
MAJOR CUSTOMS RESHUFFLE TO STRENGTHEN ENFORCEMENT
In a significant administrative move, the FBR has reshuffled senior officers of the Pakistan Customs Service (BS-19 and BS-20). Key postings in Karachi, Hyderabad, Gadani, and Islamabad have been realigned to optimize efficiency and enforcement capacity. Officers previously serving at enforcement and appraisement posts have been reassigned to new roles, while those in FBR Headquarters have been shifted to field positions. The move underscores the FBR’s intent to streamline operations, tighten oversight, and ensure stronger enforcement at critical customs zones.
PRESIDENTIAL ORDERS IN TAX CASES FACE FBR CHALLENGE
A unique constitutional clash has surfaced after the FBR obtained a stay order from the Sindh High Court against a Presidential decision in the MH Traders tax dispute. The President had earlier overruled both FBR and the Federal Tax Ombudsman (FTO) on misclassification of imported goods, declaring his order “absolute.” The Senate Finance Committee is now probing whether such Presidential directives can legally be contested, as the Law Division insists they are binding under section 18 of the Federal Ombudsman Institutional Reforms Act, 2013.
ISLAMIC IDEOLOGY COUNCIL RECONSIDERS WITHHOLDING TAX RULING
The Islamic Ideology Council (IIC) initially shocked policymakers by declaring withholding tax “un-Islamic” and oppressive. However, Chairman Allama Raghib Naeemi has clarified that the matter was misunderstood during deliberations and will be re-examined in the Council’s next meeting. The initial announcement sparked intense debate across political, religious, and economic circles, raising critical questions about the compatibility of Pakistan’s tax system with Islamic financial principles.
GOVERNMENT GRANTS TAX EXEMPTION TO GILGIT-BALTISTAN TRADERS
After weeks of strikes at the Sost Dry Port, the federal government has announced major tax relief for Gilgit-Baltistan. Imports routed through the Silk Route Dry Port will now be exempt from sales tax, income tax, and federal excise duty, provided the goods are for local consumption and imported by firms owned by indigenous residents. The package, capped at Rs 4 billion annually, comes with strict quotas and monitoring to prevent smuggling outside GB. The move aims to restore trade flows, boost regional development, and address long-standing grievances of local traders.
FBR EXTENDS DEADLINE FOR E-INVOICING COMPLIANCE
The Federal Board of Revenue has officially extended the deadlines for mandatory electronic invoicing under SRO 1852(I)/2025, giving businesses more time to integrate with the new system. Initially rolled out under SRO 1413(I)/2025, the reform requires real-time issuance and reporting of digital invoices. The FBR emphasized that the extension is temporary and urged taxpayers to prepare in advance, warning that non-compliance could invite penalties. The system is designed to enhance transparency, curb under-reporting, and modernize Pakistan’s tax administration.
KTBA REQUESTS EXTENSION FOR INCOME TAX RETURN FILING
The Karachi Tax Bar Association (KTBA) has written to the FBR seeking an extension of the annual return filing deadline until October 31, 2025. The Bar highlighted persistent glitches in the IRIS portal, including errors in tax computations, disappearing saved drafts, and continuous formula changes that prevent taxpayers from finalizing returns. The KTBA also pointed to the hardships faced by flood-affected businesses and individuals, urging relief under section 214A read with section 119 of the Income Tax Ordinance, 2001. The plea argues that enforcing the September 30 deadline would be inequitable in the current circumstances.
ECC APPROVES COMMERCIAL IMPORT OF USED VEHICLES
In a landmark policy shift, the Economic Coordination Committee (ECC) has permitted the commercial import of used vehicles up to five years old until June 30, 2026. Imports will be subject to a 40% regulatory duty in addition to existing customs duties, with gradual reductions until 2029-30. The policy also requires strict compliance with environmental and safety standards. The move aims to expand consumer choice while protecting local industry and ensuring fiscal discipline. After 2026, the vehicle age limit will be lifted, creating a phased liberalization of the auto import regime.
CUSTOMS VALUES IPHONE 16 PRO MAX AT $1,278
The Directorate General of Customs Valuation has revised the official customs value of Apple’s iPhone 16 Pro Max 512GB to $1,278 (around Rs. 356,629 as of September 24, 2025). The revision was made to align declared import values with prevailing market prices and prevent under-invoicing. The updated value ensures fairer duty assessment for high-end smartphone imports, reflecting the growing demand for Apple’s latest devices in Pakistan.
DGTO SEEKS PROPOSALS FOR NEW JOINT CHAMBERS FRAMEWORK
The Directorate General of Trade Organisations (DGTO) has invited proposals from all licensed trade bodies to revamp the framework for Pakistan’s Joint Chambers of Commerce & Industry (JCCIs). The Senate Commerce Committee recently flagged delays, outdated rules, and a lack of clarity in the current licensing system. The DGTO is now considering reforms to streamline procedures, introduce embassy-based verification instead of lengthy NOCs, and set performance benchmarks for chambers. The reforms are expected to align Pakistan’s model with international best practices and strengthen bilateral trade relations.
WTO WELCOMES CHINA’S MOVE TO RELINQUISH SPECIAL STATUS
The World Trade Organization has applauded China’s announcement that it will no longer seek “special and differential treatment” as a developing country in future WTO negotiations. WTO Director-General Ngozi Okonjo-Iweala called it a “pivotal moment” toward fairer global trade. While China insists it remains a “responsible developing country,” the decision addresses long-standing concerns from wealthier nations that Beijing’s economic clout is inconsistent with developing-nation privileges. The move could reshape the balance of future trade talks.
SUPREME COURT QUESTIONS SUPER TAX BURDEN
The Supreme Court has taken up the case challenging the Super Tax under section 4B of the Income Tax Ordinance, 2001. During hearings, Justice Jamal Khan Mandokhail observed that had tax recovery been properly ensured, there might not have been any need to impose this additional levy. The taxpayer’s counsel argued that Super Tax should apply only on income exceeding Rs 150 million, while it is currently being imposed more broadly, creating an unjust burden. The court’s decision could reshape future application of Super Tax, especially in determining whether salaried individuals should also fall under its ambit.
FBR MAY TAP INFORMAL DATA FOR TAX COLLECTION
In a bold proposal, an FBR Chief Commissioner suggested using informal data sources such as neighbours, relatives, colleagues, and even household staff to identify undeclared wealth and hidden income. The recommendation also includes increasing whistleblower rewards from Rs 5 million to Rs 150 million with strict secrecy protections. This move comes as the government explores imposing a flood levy on luxury imports, expected to generate up to Rs 30 billion. If adopted, this could mark a major shift in Pakistan’s tax enforcement, extending beyond formal documentation to lifestyle-based monitoring.
TAX CRACKDOWN EXPANDS ACROSS PAKISTAN
The FBR has widened its tax evasion crackdown to jewellers and real estate firms in Sindh and Khyber Pakhtunkhwa. Out of 57,000 jewellers nationwide, only 20,000 are registered, and just half of them have filed returns. Notices, raids, and on-ground surveys are being carried out by 450 Inland Revenue inspectors to expose misdeclared assets and incomes. Officials highlighted that last year, only 1,100 individuals declared assets worth over Rs1 billion, a figure that appears highly understated. The message is clear: luxury sectors and high-net-worth individuals remain a priority for enforcement.
KCCI CALLS FOR TAX RETURN DEADLINE EXTENSION
The Karachi Chamber of Commerce & Industry (KCCI) has urged the FBR to extend the deadline for filing income tax returns from September 30 to October 31, 2025, along with a one-month extension for sales tax returns of August 2025. Citing severe IRIS portal glitches, connectivity issues due to recent floods, and system inefficiencies, the KCCI stressed that taxpayers are struggling to comply. The chamber argued that similar extensions in the past improved compliance and revenue, and such relief would encourage timely filing while easing pressure on businesses.
IRIS ERRORS RISK DOUBLE TAXATION
Just days before the deadline, the Lahore Tax Bar Association (LTBA) flagged serious errors in the IRIS portal, including miscalculation of AOP tax credits under section 92 and incorrect surcharge application under section 4AB. These glitches could result in double taxation and inflated demands on taxpayers. The LTBA called for immediate corrective action, refunds where necessary, and a public clarification from the FBR. Without swift resolution, confidence in the digital filing system may be undermined, risking delays and disputes during the busiest filing season.
PORT QASIM EXPANSION TO BOOST EXPORTS
The government has announced new infrastructure at Port Qasim to strengthen export capacity, particularly for cement and clinker. Plans include two additional multi-purpose berths, a 30,000-ton storage facility, and permanent repairs to existing structures by December 2025. Work on the new berths is expected to begin by year-end, with collaboration from the All Pakistan Cement Manufacturers Association to utilise the underused Sahiwal berth. These developments are part of a broader maritime strategy to reduce export bottlenecks and enhance Pakistan’s trade competitiveness.
SUPREME COURT REVIEWS CONSTITUTIONALITY OF SUPER TAX
The Supreme Court is actively hearing challenges to the Super Tax under section 4C of the Income Tax Ordinance, 2001, with petitioners arguing that the levy violates constitutional principles by being imposed purely to create “fiscal space.” Counsel highlighted that rather than reforming public spending and curbing waste, the government shifted the burden to high-income taxpayers, a move claimed to be arbitrary and inflationary. The bench also questioned the definition of “windfall profits,” raising whether sudden increases in commodity prices, such as petrol or sugar, could be taxed in the same manner. The case will be a defining precedent for the balance between revenue generation and constitutional protections against arbitrary taxation.
NO EXEMPTION FOR RESIDENT COMPANIES ON FOREIGN CURRENCY ACCOUNTS, RULES IHC
The Islamabad High Court (IHC) has clarified that resident companies cannot claim tax exemptions on income derived from foreign currency accounts maintained in Pakistan. The judgment overturned a prior tribunal ruling and reaffirmed that exemptions under clauses 78 and 78B of the repealed Income Tax Ordinance, 1979, were intended for individuals only. The decision, involving Sun Gas Pvt Ltd, underscores the judiciary’s strict interpretation of exemption provisions and reinforces the department’s position that corporate entities remain liable for taxation on all such income.
AUDITOR GENERAL CRITICISES FBR’S UNDERUSE OF MALOMAAT DATA
The Auditor General of Pakistan (AGP) has flagged serious concerns over FBR’s limited use of its Malomaat Portal data. Despite access to comprehensive datasets, such as industrial utility connections, luxury car ownership, property transactions, and foreign travel histories, many high-net-worth individuals continue to file nil returns with zero tax payments. The report recommends that FBR aggressively leverage this data to enforce compulsory registration, broaden the tax base, and work with institutions like NADRA, motor registration authorities, and property registrars. Strengthening internal controls and audit access were also highlighted as essential for boosting compliance.
FBR INTRODUCES AI-POWERED CHATBOT FOR TAXPAYER SUPPORT
In a landmark digital transformation step, the Federal Board of Revenue (FBR) has launched an AI-powered Chatbot, the first of its kind by any public-sector body in Pakistan. The chatbot, available on FBR’s official website, offers 24/7 responses to taxpayer queries, ranging from basic FAQs to complex technical questions. The tool, still in beta mode, is part of FBR’s broader Transformation Plan and aims to replace traditional call centres over time. While responses carry a disclaimer that they do not constitute legal advice, the chatbot demonstrates FBR’s commitment to adopting cutting-edge technology to enhance transparency, taxpayer facilitation, and efficiency.
RETAIL CHAIN RAIDED IN KARACHI FOR SUSPECTED SALES TAX EVASION
The Regional Tax Office (RTO)-1 Karachi carried out a surprise raid on a prominent retail chain suspected of evading sales tax. Acting under section 38 of the Sales Tax Act, 1990, officers inspected records, stock registers, and digital systems, seizing documents to estimate the extent of under-reporting. With over 30 outlets nationwide, the brand’s alleged failure to deposit collected sales tax underscores FBR’s intensified scrutiny of the retail sector. Authorities stressed that sales tax collected from consumers belongs to the state and that withholding it will trigger strict enforcement.
CRACKDOWN ON JEWELLERS AND SOCIAL MEDIA TAX DODGERS
FBR has intensified enforcement against jewellers and wealthy individuals flaunting lifestyles online. Of nearly 57,000 jewellers nationwide, only 20,000 are registered, and just 10,000 have filed returns, exposing widespread tax evasion. Separately, over 100,000 individuals showcasing luxury cars, mansions, jewellery, and extravagant weddings on social media are under surveillance. Officials have warned that those failing to align their tax returns with their displayed wealth will face strict legal action, marking a new frontier in data-driven enforcement.
FBR ADMITS RS3.6 TRILLION SALES TAX GAP
The Federal Board of Revenue has acknowledged a staggering Rs3.6 trillion sales tax gap, largely due to fragmentation and informality in the retail sector. While enforcement reportedly recovered Rs 874 billion in FY 2024-25, transparency on figures remains limited. The largest gaps were identified in textiles (Rs 814 billion), petroleum and food (Rs 384 billion each), and fertilizers and chemicals (Rs326 billion). Traders, meanwhile, have protested what they call harassment by tax officials. To bridge the gap, FBR plans to emphasize manufacturing-stage enforcement and expand digital invoicing systems.
PAKISTAN TAX BAR REQUESTS EXTENSION FOR RETURN FILING
The Pakistan Tax Bar (PTB) has urged Finance Minister Aurangzeb to extend the tax return filing deadline from September 30 to October 31, 2025. The Bar cited devastating floods across Punjab, Sindh, and KPK, which have severely disrupted businesses and administration, alongside persistent glitches in the IRIS portal. The request aims to allow taxpayers to file without undue penal consequences, striking a balance between compliance requirements and ground realities.
FBR PLANS RECORD WHISTLEBLOWER REWARDS TO EXPOSE TAX DODGERS
The Federal Board of Revenue is finalizing plans to dramatically increase whistleblower rewards from Rs 5 million to as high as Rs 150 million, making insider reporting against tax evasion more lucrative than ever. Confidentiality will be strictly protected under section 216 of the Income Tax Ordinance, 2001, ensuring anonymity for informants. The initiative seeks to mobilize employees, neighbors, and even domestic staff who often hold first-hand knowledge of hidden wealth. Officials believe this bold step could help unlock vast untaxed assets in Pakistan’s shadow economy.
SINDH HIGH COURT RULES SUTURES TAXABLE AT STANDARD RATE
The Sindh High Court (SHC) has ruled that sutures are not eligible for reduced or exempt sales tax treatment. Dismissing a petition by Hoora Pharma, the bench upheld customs’ classification of sutures under PCT 3006.1090, making them taxable. The decision emphasizes the importance of precise classification in customs and sales tax law, particularly for pharmaceutical and medical imports.
PAKISTAN SEEKS CONCESSIONS FROM CHINA ON 700 ITEMS
During ongoing China-Pakistan Free Trade Agreement (CPFTA) Phase III negotiations, Pakistan has requested unilateral tariff concessions on 700 items to regain competitiveness lost to China’s agreements with other partners. Officials stressed the urgent need for value-added exports rather than raw materials, while also settling a dispute over the Karachi Chamber of Commerce’s status. Parliamentarians called for reforms, stronger accountability of trade officials, and the establishment of a dedicated gems and jewellery council to enhance exports.
KARACHI PORT TRUST SEEKS LAND FOR TRUCK TERMINAL
The Karachi Port Trust (KPT) has requested 600 acres of land along the Northern Bypass from the Sindh Government to develop a truck terminal. Officials stated the terminal would reduce traffic congestion on Maripur Road and Kemari caused by heavy port traffic, and could be made operational within two months if approved. The initiative includes plans for electronic tagging of vehicles, ensuring only authorized trucks enter the city, thereby improving safety and easing congestion.
FBR PARTNERS WITH LUMS FOR POSTGRADUATE TRAINING OF OFFICERS
In a landmark collaboration, the Federal Board of Revenue (FBR) has signed an agreement with the Lahore University of Management Sciences (LUMS) to deliver a customized Postgraduate Diploma (PGD) Programme for its officers. The program will cover digital economy, advanced accounting, data analytics, e-commerce, supply chain management, and international taxation. Chairman FBR Rashid Mahmood Langrial hailed the initiative as a major investment in institutional capacity building, equipping officers with the skills needed for modern tax administration.
SUPREME COURT ADJOURNS SUPER TAX HEARING UNDER SECTION 4B
The Supreme Court has adjourned until September 22, 2025, the case challenging the imposition of super tax under section 4B of the Income Tax Ordinance, 2001. Petitioners argued that the current structure unfairly differentiates between profit levels, creating distortions when compared with section 4C. Counsel highlighted conflicting judgments from the Sindh and Islamabad High Courts, pressing the matter as one of constitutional interpretation. The bench directed the Additional Attorney General to file written submissions before arguments resume. The outcome of this case is expected to have significant consequences for the corporate tax landscape in Pakistan.
NO MINI-BUDGET UNDER CONSIDERATION, CONFIRMS FBR CHIEF
Dismissing speculation, FBR Chairman Rashid Mahmood Langrial has confirmed that the government has no plans to introduce a mini-budget or supplementary finance bill at this stage. While he acknowledged that flood-related damages and fiscal pressures are being assessed, he made it clear that neither additional taxation measures nor downward revisions in the FY 2025-26 collection target are currently on the table. His remarks aim to reassure both businesses and taxpayers amid market concerns about mid-year tax interventions.
FBR NOTIFIES GRIEVANCE REDRESSAL COMMITTEE FOR FACTORY DEPUTATIONS
In a move to address industry concerns, the Federal Board of Revenue has established a grievance redressal committee to oversee deputations of Inland Revenue officials under section 40B of the Sales Tax Act, 1990. The committee includes senior FBR members, such as Member IR Operations and Member Legal IR, alongside key representatives from FPCCI, KCCI, and LCCI. The committee will review complaints against field actions, monitor the deputation process at factories and manufacturing premises, and ensure fair oversight. This step reflects FBR’s attempt to balance regulatory enforcement with industry cooperation.
KTBA CALLS FOR EXTENSION OF ADVANCE TAX DEADLINE
The Karachi Tax Bar Association (KTBA) has urged the FBR to extend the advance tax payment deadline to October 10, 2025 for the first installment under section 147 of the Income Tax Ordinance, 2001. The association cited severe technical breakdowns of the IRIS portal during the September 15 deadline, which made timely compliance impossible for many taxpayers. KTBA has requested that all recovery notices under section 138 be withdrawn and coercive measures, such as penalties, default surcharges, and bank account attachments, be suspended. The Bar emphasized that system reliability must be ensured before penalizing taxpayers.
PAKISTAN CUSTOMS TARGETS 12-HOUR CARGO DWELL TIME
Pakistan Customs has announced a major reform initiative to reduce average cargo dwell time to just 12 hours, aligning with the Prime Minister’s vision of faster trade facilitation. Chief Collector Wajid Ali stressed that shorter dwell times are essential to lower costs for importers and exporters, boost trade competitiveness, and bring Pakistan in line with international best practices. FPCCI welcomed the push, highlighting progress made under the Faceless Customs Assessment (FCA) system but also pointing out operational inefficiencies that must be resolved. Expanding green channel clearances, improving complaint handling, and removing bottlenecks were identified as priorities. If implemented effectively, this could significantly improve Pakistan’s Ease of Doing Business ranking.
FBR SUSPENDS SENIOR CUSTOMS OFFICER OVER MISCONDUCT ALLEGATIONS
The Federal Board of Revenue has suspended Sheeraz Ahmad (BS-19), Secretary FBR HQ, under Rule-5(1) of the Civil Servants (Efficiency & Discipline) Rules, 2020, for a period of 120 days. This action follows controversy surrounding a Pakistan Customs Audit (PCA) report that alleged Rs 100 billion in losses after the rollout of the Faceless Customs Assessment (FCA) system. FBR’s top leadership has dismissed the report as factually flawed, clarifying that FCA has instead increased revenue and transparency. An inquiry committee has been constituted to identify responsibility for the preparation and leak of the report. The move reflects FBR’s commitment to safeguarding the credibility of digital reforms in customs clearance.
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