Islamabad, October 11, 2025 — In a major fiscal breakthrough, the Federal Board of Revenue (FBR) has collected an unprecedented Rs89 billion in advance tax from exports during the first year of the new levy’s implementation — marking a historic shift in Pakistan’s taxation structure for the export sector.
The massive collection comes under Section 147(6C) of the Income Tax Ordinance, 2001, introduced through the Finance Act 2024, which officially abolished the long-standing final tax regime for exporters. This sweeping reform requires exporters to pay an adjustable advance tax on their foreign exchange proceeds, in addition to the existing withholding tax.
According to FBR sources, the measure was designed to ensure greater documentation and transparency in exports, while broadening the tax base. Under the revised system, withholding agents are now mandated to deduct or collect tax at the rate of 1% on export proceeds — on top of the existing 1% minimum tax under Section 154. In effect, a total of 2% is now collected on export income, making it one of the most significant fiscal adjustments in recent years.
Officials revealed that the FBR recorded Rs88.51 billion in tax on export proceeds during FY2024-25, slightly below the Rs90 billion collected under the previous regime — but with the new advance tax system, the government expects higher compliance and sustained revenue growth from exports in the coming years.
While the new regime has strengthened tax collection, it has also raised concerns among exporters, who must now submit comprehensive transaction records to the FBR. Industry insiders warn that without simplified documentation procedures, the reform could slow export growth, particularly for small and medium-sized enterprises.
Nevertheless, the FBR remains confident that this tax overhaul will enhance transparency, curb evasion, and ultimately strengthen Pakistan’s fiscal foundation through fairer and more accountable export taxation.