Pakistan faces PKR 170 billion revenue shortfall in FY25's first quarter

The Federal Board of Revenue (FBR) is projected to face a significant revenue shortfall of PKR 170 billion in the first quarter of the current fiscal year, despite taking advances from banks and companies.

According to an official, the tax department expects to collect between PKR 2,480 billion to PKR 2,490 billion by September 30.

Government has directed the FBR to prepare rules for an ordinance to meet the annual revenue target of PKR 12.9 trillion for FY25, the official said.

The prime minister recently approved the FBR's transformation plan, which includes several enforcement measures such as abolishing the non-filer category and restructuring non-registered business entities.

The FBR will soon issue new rules pertaining to non-filers, and a summary has been forwarded to the cabinet to place tax policy under the Ministry of Finance.

Tax officials disclosed that the IMF has been pressing Pakistan for revenue initiatives targeting retailers, the property sector, and agricultural income.

Official sources had previously stated that under the country's agreement with the International Monetary Fund (IMF), if the revenue collection target for FY25's first quarter was missed by over PKR 100bn, the government would introduce a mini-budget with additional tax measures.

FBR’s Operations Wing reported that only PKR 0.5 million has been collected from retailers so far, against a commitment of PKR 40 billion for the fiscal year. The federal and provincial governments are coordinating to implement mechanisms for collecting taxes from farmers starting January 1, 2025.

Officials indicated that a major overhaul of the FBR is imminent, with the tax policy unit being transferred to the Ministry of Finance.

Senior IRS officer Dr. Najeeb Memon has been shortlisted to head this department. The government plans to hire private sector individuals on management pay scales to strengthen the tax policy unit.

Additionally, the FBR will soon announce a massive reshuffling, with all Operations Wing team members, including the member operations, being transferred.

Current member IR policy Hamid Attique Sarwar is expected to be posted as member operations FBR.

Chairman FBR aims to strengthen the Operations Wing by prioritizing officers with backgrounds in economics and law, as well as degrees from reputable institutions like IBA or LUMS.