Tax authority plans broader reforms to strengthen compliance and expand tax base
The Federal Board of Revenue (FBR) will develop new audit selection parameters aimed at improving revenue collection and broadening Pakistan’s tax base as the country faces persistent tax shortfalls, officials said.
The move is part of wider revenue administration reforms designed to strengthen tax compliance and improve monitoring of high-risk taxpayers.
According to officials, the FBR has already implemented several key measures under its ongoing transformation plan, including the deployment of a Compliance Risk Management (CRM) system to strengthen taxpayer audits, expansion of digital invoicing systems, and enhanced production monitoring mechanisms.
FBR plans centralized audit policy
The tax authority said it will prepare a new audit manual and audit policy by the end of August 2026 to ensure fair and transparent treatment of taxpayers.
Under the proposed framework, audit case selection will be centralized through administrative prioritization and monitoring of high-risk cases using the CRM system.
Officials believe the reforms could help improve tax enforcement while reducing arbitrary audit practices.
Revenue reforms aimed at widening tax base
Despite recent reforms, the FBR continues to face challenges in meeting revenue targets, highlighting concerns over Pakistan’s narrow tax base and weak documentation of the economy.
Authorities expect revenue gains from the new measures to begin materializing in fiscal year 2026-27, although officials acknowledged that current reforms mainly target existing taxpayers.
The FBR is now expected to intensify efforts to expand retailer tax registration and push for stricter enforcement measures linked to tax filing.
Under proposed reforms, the tax authority may seek powers to restrict certain high-value transactions to individuals who have filed income tax returns, a move aimed at encouraging greater tax compliance and documentation of economic activity.
The measures are part of broader efforts to stabilize public finances and strengthen Pakistan’s revenue collection system amid ongoing fiscal pressures.