Karachi, October 17, 2025 — In a shocking revelation that has sent tremors through Pakistan’s financial corridors, a powerful representation submitted to the Chairman of the Federal Board of Revenue (FBR) has exposed what appears to be a multi-billion-rupee tax scam exploiting the FATA/PATA import concessions.
According to the explosive document filed by Khawar Noorani, a Karachi-based taxpayer and industry insider, hundreds of importers are allegedly abusing interim court reliefs to clear imported goods at just 10% sales tax instead of the standard 18%, under the guise of being FATA-based manufacturers. The result? A colossal drain on the national exchequer, widespread market distortion, and the creation of a parallel tax-free economy operating right under FBR’s nose.
The 35-page representation, submitted under Section 7 of the FBR Act, 2007, paints a disturbing picture of systemic failure. It accuses certain importers of falsely declaring themselves as FATA or PATA manufacturers to bypass the regulatory safeguards laid out in Customs General Order (CGO) No. 12/2002. Instead of transporting imported consignments to the tribal areas under customs supervision, these goods are allegedly being diverted and dumped into Karachi’s markets, sold at cut-throat prices that genuine taxpayers cannot match.
“This unchecked exploitation is not just tax evasion — it’s economic sabotage,” the document warns. “The continued misuse of judicial reliefs is destroying fair competition and eroding public trust in the integrity of Pakistan’s fiscal system.”
The situation worsened after the Finance Act, 2025, replaced the full sales tax exemption previously available to FATA/PATA industries with a concessional 10% rate under Entry No. 89 of the Eighth Schedule. Instead of promoting gradual fiscal integration, the new regime has become a loophole for tax dodgers armed with court orders from the Peshawar High Court.
Insiders reveal that interim judicial protection has allowed dozens of importers to bypass pay-order deposits, bonded transportation, and IOCO verification — key mechanisms meant to prevent misuse. “In simple terms, the goods never reached FATA — they went straight into Karachi’s warehouses,” the letter alleges.
The representation calls for a high-level crackdown, urging the FBR to form a Joint Investigation Team (JIT) with representatives from Military Intelligence (MI), Inter-Services Intelligence (ISI), and FBR’s Directorate of Intelligence and Investigation to trace financial flows and identify culprits. It also demands a post-clearance audit of all consignments cleared under court orders to expose fraudulent importers.
Noorani accuses the FBR of “gross negligence and maladministration”, citing its failure to coordinate policy, defend cases effectively, and safeguard the public exchequer. “The FBR’s silence in the face of this abuse amounts to complicity,” he asserts.
Copies of the representation have been sent to the Prime Minister of Pakistan, Chief of Army Staff, Senate Finance Committee, and the Federal Tax Ombudsman, demanding immediate intervention.
If proven true, this scandal could be one of Pakistan’s largest tax frauds in recent history, exposing how powerful networks have turned judicial reliefs into a license to loot. The question now haunting Islamabad: Will the FBR finally act — or will billions more vanish in the name of FATA relief?