Islamabad, August 4, 2025 – In a major fiscal breakthrough, the Federal Board of Revenue (FBR) has shattered a decades-long barrier by achieving a double-digit tax-to-GDP ratio, a milestone hailed as a turning point in Pakistan’s economic journey.
According to figures released by the Finance Ministry, the FBR’s tax-to-GDP ratio reached 10.24% in fiscal year 2024-25, a dramatic rise from 8.78% recorded in the previous year. This marks the first time in over two decades that Pakistan’s tax collection has crossed into double-digit territory.
The achievement comes on the back of an impressive tax collection figure of Rs11.74 trillion against a GDP of Rs114.69 trillion in FY25, compared to Rs9.31 trillion collected in FY24 when the GDP stood at Rs106.04 trillion. The new tax-to-GDP ratio reflects improved documentation, policy reforms, and enhanced enforcement by the FBR.
For more than 24 years, Pakistan’s tax-to-GDP ratio languished below the 10% mark, despite steady GDP growth. Economists and global institutions have repeatedly stressed the importance of a 15% ratio to ensure fiscal sustainability, economic development, and reduced dependency on external borrowing.
The low ratio historically exposed deep structural flaws—such as a narrow tax base, rampant tax evasion, overreliance on indirect taxes, and a largely untaxed informal economy. Multiple governments promised tax reforms, but few succeeded in pushing the needle beyond single digits—until now.
Experts believe that this breakthrough signals the beginning of a positive trend. With continued reforms and efforts to widen the tax net, FBR may be on track to meet or even surpass the 15% tax-to-GDP ratio benchmark in the years ahead, giving Pakistan new fiscal strength to fund infrastructure, education, and public services.