The Federal Board of Revenue (FBR) has initiated a major scrutiny drive targeting over 480 leading exporters in Pakistan. This action follows amendments introduced through the Finance Act 2024, which altered Section 154 of the Income Tax Ordinance 2001. Previously, export proceeds were subject to a final tax regime, but the change converted it into a minimum tax system for Tax Year 2025. FBR analysis revealed that many exporters significantly reduced their declared taxable income after this shift, prompting concerns over potential inconsistencies or unjustified reductions.
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Exporters’ Concerns and Potential Impact
The directive, issued on December 30, 2025, instructs field formations to examine declarations closely and initiate actions under sections 177 (audit), 122(5A) (case reopening), and 175C (posting officers on premises) where abnormalities are found. Exporters and business councils, including the Pakistan Business Council, have voiced strong opposition, describing the move as creating panic and harassment. They argue it contradicts the government’s repeated pledges for export-led growth, highlighted by Prime Minister Shehbaz Sharif and ministers like Muhammad Aurangzeb and Ahsan Iqbal, who advocate shifting to an export-driven economy to achieve targets like a $1 trillion GDP by 2035.
Critics, including tax experts, warn that high energy costs, stuck refunds, and now potential audits could discourage investment in the export sector. The FBR has demanded detailed reports on actions taken, including revenue recovered, by January 1, 2025 (extended contextually). While the FBR aims to ensure compliance and prevent revenue leakage, the timing has sparked debate on balancing enforcement with facilitation for a vital sector contributing significantly to foreign exchange.
This development underscores ongoing tensions between revenue collection goals and business ease in Pakistan’s tax landscape.