Pakistan is aiming for an ambitious tax revenue target of Rs14.3 trillion for the fiscal year 2025-26, which represents 11% of the projected GDP [4, 8, 20]. This target is a Rs2 trillion increase over the revised target for the current fiscal year [4, 8, 13]. The government anticipates needing to implement additional tax measures worth at least Rs500 billion to achieve this goal [4, 8, 20].
The government may present the budget around June 2 or 3, 2025 [4, 8]. The IMF is expected to review the country's fiscal goals during its visit to Pakistan starting on May 14, 2025 [4, 8, 20].
Tax Reform Proposals
The Overseas Investors Chamber of Commerce and Industry (OICCI) has suggested tax reforms for the upcoming budget, including a phased reduction of the corporate tax rate to 28% in FY2025-26, with a 1% annual decrease to reach 25% in five years [3, 16, 21]. OICCI also advocates for bringing under-taxed sectors like agriculture, real estate, and wholesale/retail trade into the formal tax system [3, 16, 21]. They also propose cutting the general sales tax rate on goods to 17%, with further annual reductions to 15% [3].
The Federal Board of Revenue (FBR) missed its tax revenue collection target for March 2025 by over Rs100 billion [2]. The tax collection stood at Rs1.1 trillion till March 27, 2025, against the target of Rs1.22 trillion, reflecting a shortfall of over Rs120 billion [2]. Overall, the FBR collected Rs8.44 trillion during the first nine months (July-March) of FY25 against the target of Rs9.17 trillion [2].
The Asian Development Bank (ADB) projects Pakistan's economy to grow by 2.5% in FY2025 and 3.0% in FY2026 [7, 11]. The World Bank expects Pakistan's economy to grow by 2.7% in the current fiscal year ending June 2025 [17].
To achieve its tax goals and foster economic growth, Pakistan faces the challenge of broadening its tax base, implementing effective reforms, and gaining the confidence of investors and international institutions [3, 6, 16].
This article is based on our author's analysis of materials taken from the following resources: The Express Tribune, Profit by Pakistan Today, Mettis Global News, Business Recorder, Dawn, and AUGAF Business.