The Federal Board of Revenue (FBR) has been given fresh authority to fix retail prices of goods as part of the Finance Act, 2025 — a move aimed at tightening control over tax evasion in Pakistan’s markets.
According to Muhammad Zeeshan Merchant, former president of the Karachi Tax Bar Association (KTBA), key amendments have been introduced to redefine how retail prices are regulated.
One major change includes placing a cap on deductions like chilling, storage, and handling charges, especially in the beverage industry. Now, businesses can only reduce retail prices by up to 5% for such costs, preventing artificial price reductions that lead to tax shortfalls.
Most significantly, the FBR is now empowered to directly fix retail prices of goods where there is suspicion of market manipulation or tax evasion. This means if certain manufacturers or retailers are caught underreporting product prices to avoid taxes, the FBR can step in and set the price themselves.
Another important provision is the introduction of a minimum retail price for imported branded goods. The rule requires these goods to be sold at no less than 130% of their customs-assessed value, including duties and federal excise tax. This aims to stop importers from undervaluing products at the retail level.
While these changes aim to improve tax collection and reduce under-invoicing, Merchant notes that similar rules were previously issued through general orders. Applying them broadly across all imports may create challenges and even spark legal disputes from importers.
Still, the move signals FBR’s growing role in enforcing pricing transparency and cracking down on tax evasion at the retail level.