Pakistan may need to introduce as much as PKR 378 billion in new tax measures in the upcoming federal budget to meet its revenue goals for fiscal year 2026-27, with retailers, fuel consumers, tobacco companies and digital businesses likely to face fresh levies, according to a report by brokerage house Arif Habib Limited.
In its budget outlook report ahead of the federal budget expected in early June, Arif Habib Limited said the government is preparing a “fiscally disciplined and reform-oriented framework” aimed at maintaining macroeconomic stability while offering selective relief to salaried individuals and key sectors.
The report estimates the government could generate about PKR 199 billion by bringing retailers and wholesalers more effectively into the income tax net, making it the single largest proposed revenue measure.
Another PKR 65 billion could come from a proposed “green levy” on petroleum products, which would increase fuel costs for consumers under environmental taxation measures.
AHL estimates that raising the Federal Excise Duty (FED) on tobacco products could generate an additional PKR 51 billion, while higher excise taxes on sugary drinks could contribute PKR 18 billion.
The report also projects PKR 15 billion in revenue from extending the 18% sales tax to previously tax-exempt tribal regions, including FATA and PATA.
Digital and online sectors are also expected to come under the tax net. The report says the government may collect about PKR 11 billion through a proposed 1% digital services tax, while licensing and taxing online gaming could generate another PKR 8 billion.
An additional PKR 11 billion may come from a proposed 2% levy on corporate advertising revenues, the report adds.
Combined, the measures are estimated to generate PKR 378 billion in additional revenue, although AHL says the government could eventually raise as much as PKR 445 billion through new taxation and enforcement steps.
The brokerage projects Federal Board of Revenue (FBR) collections for FY26 at about PKR 13.45 trillion and estimates that nominal economic growth driven by inflation and real GDP expansion would add about PKR 1.76 trillion in revenue in FY27.
With the proposed measures included, AHL forecasts FBR revenue could rise to PKR 15.66 trillion in FY27, exceeding the government’s likely target of PKR 15.26 trillion by nearly PKR 393 billion.
However, under a more conservative scenario using lower tax collection assumptions, the FBR could face a shortfall of about PKR 505 billion against the target.
The report says the government is also considering relief measures, including lower income tax rates for salaried individuals, a phased reduction in the super tax, rationalization of vehicle import duties and revival of housing finance schemes to support the construction sector.
AHL says any revenue loss from relief measures would likely be offset through new taxes and stricter enforcement aligned with the International Monetary Fund’s reform agenda.
The report projects Pakistan’s economic growth at 3.5% in FY27, slightly lower than an estimated 3.7% in FY26, while inflation is expected to rise to 8.4% from 7.2%.
Pakistan’s current account deficit is projected at 0.9% of GDP in FY27, compared with an estimated 0.4% deficit in the current fiscal year.
According to the report, the FY27 budget is expected to remain closely aligned with IMF conditions, including broadening the tax base, strengthening tax enforcement, reducing subsidies and continuing reforms in the energy sector and state-owned enterprises.
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