FBR’s updated Sales Tax Act covers production, assembly, processing, packaging and certain intellectual property holders under the definition.

ISLAMABAD: The Federal Board of Revenue (FBR) has defined the term “manufacturer” or “producer” under Pakistan’s sales tax law for Tax Year 2027, setting out the activities and categories of persons covered by the definition.

The FBR issued the Sales Tax Act, 1990, updated up to June 30, 2026, which provides the legal definition of a manufacturer or producer for sales tax purposes.

Under the law, a “manufacturer” or “producer” means a person who engages, whether exclusively or otherwise, in the production or manufacture of goods, regardless of whether the raw materials used to produce or manufacture those goods are owned by that person.

Who is considered a manufacturer?

According to the FBR, the definition covers a person who, through any process or operation:

• assembles goods;

• mixes goods;

• cuts goods;

• dilutes goods;

• bottles goods;

• packages or repackages goods; or

• prepares goods in any other manner.

The definition therefore extends beyond businesses directly involved in conventional manufacturing and includes a range of processing and preparation activities.

The law further includes an assignee or trustee in bankruptcy, liquidator, executor or curator of any manufacturer or producer, as well as any person who disposes of the manufacturer’s or producer’s assets in a fiduciary capacity.

Patent and proprietary rights also covered

A person, firm or company that owns, holds, claims or uses any patent, proprietary or other right relating to goods being manufactured is also covered by the definition.

This applies whether the goods are manufactured in the person’s, firm’s or company’s own name or on their behalf, and regardless of whether that person, firm or company sells, distributes, consigns or otherwise disposes of the goods.

Manufacturer-cum-exporter condition

The Sales Tax Act also sets out a specific condition for refund purposes.

Under the proviso, only a person who owns or has their own manufacturing facility for manufacturing or producing the goods exported, or intended to be exported, will be treated as a manufacturer-cum-exporter.

The definition is relevant to businesses involved in manufacturing, processing, packaging and exporting goods and determines their treatment under Pakistan’s sales tax regime for Tax Year 2027.