Pakistan records fall in active tax filers in latest FBR assessment

Pakistan’s Federal Board of Revenue (FBR) has released the first Active Taxpayers List (ATL) for Tax Year 2025, showing that 6.24 million individuals and entities have filed income tax returns so far — a sharp decline of more than 2.26 million from the previous year.

The list, published just hours after the October 31 filing deadline, has raised alarm among economists and policy experts. Last year’s ATL recorded around 8.5 million active taxpayers, a drop analysts describe as “a worrying contraction” in the country’s documented tax base.

Despite the decline, officials remain optimistic that the number of active taxpayers will rise in the coming weeks as late filers submit returns. Under existing rules, taxpayers can still have their names added to the ATL by paying a nominal surcharge before the next update.

Notably, this marks the earliest-ever release of the ATL — a shift from the previous practice of publishing it annually on March 1. Under the new system, the ATL will be updated daily, allowing banks, corporations, and government departments to verify taxpayer status in real time.

“Timely publication and regular updates of the ATL are intended to increase transparency and promote compliance,” an FBR official said.

Tax experts say inclusion in the ATL offers several advantages, including lower withholding tax rates, faster banking transactions, and eligibility for government contracts and tenders.

Revenue collection falls short of target

Separately, the FBR reported that it fell short of its collection target by PKR 274 billion during the first four months of the 2025–26 fiscal year, mainly due to weaker domestic sales tax receipts.

Between July and October, the FBR collected PKR 3.835 trillion against a target of PKR 4.108 trillion. Despite the shortfall, revenue still rose 12% year-on-year, compared with PKR 3.434 trillion collected during the same period in 2024.

Officials attributed the decline primarily to reduced sales tax revenue, citing frequent power outages, the rapid shift to solar energy, and slower taxable consumption from traditional utility sources.

In October alone, FBR collections reached PKR 951 billion, missing the monthly target of PKR 1.026 trillion but showing an 8% increase from PKR 879 billion in October 2024.

Income tax collection totaled PKR 1.796 trillion during the same four-month period — below the PKR 1.899 trillion target but still up 11% from the PKR 1.611 trillion collected a year earlier.

Meanwhile, the FBR issued PKR 206 billion in refunds and rebates between July and October, a 21% increase from PKR 170 billion during the same period last year.

Officials remain hopeful

FBR officials said the early release of the ATL and ongoing digital reforms reflect a broader effort to boost compliance, transparency, and voluntary participation in the tax system.

“The shortfall in ATL figures and revenue collection is concerning, but it also indicates the economy’s transition toward cleaner energy and greater formalization,” an FBR official said, requesting anonymity as they were not authorized to speak publicly.

Economists caution that the coming months will be crucial for Pakistan’s revenue mobilization efforts, particularly as the country works to meet fiscal benchmarks set under the International Monetary Fund (IMF) Extended Fund Facility.