Islamabad, March 17, 2025 – The government of Pakistan has revised its tax collection target for the fiscal year 2024-25, adjusting it from PKR 12.97 trillion to PKR 12.35 trillion following negotiations with the International Monetary Fund (IMF).
This revision aims to ensure a more achievable revenue collection strategy while maintaining economic stability.
Revised Direct Tax Targets
According to Arif Habib Limited, the revised direct tax target for FY25 has been set at PKR 5.25 trillion, down from PKR 5.51 trillion. For comparison, Pakistan’s direct tax collection in FY24 stood at PKR 4.53 trillion.
On a calendar year (CY) basis, Pakistan witnessed a strong tax revenue performance in CY24, with total tax collections reaching PKR 10.47 trillion, reflecting an impressive 27% year-on-year (YoY) growth. Direct tax collection alone surged by 33% YoY, amounting to PKR 5.16 trillion.
During the first half of FY25 (1HFY25), direct tax collection stood at PKR 2.78 trillion, marking a 29% YoY increase. Companies listed on the KSE-100 index played a crucial role, contributing PKR 687 billion, which accounted for 24.71% of total direct tax collection—a 10% YoY growth.
Sectoral Contributions to Tax Revenue
In CY24, KSE-100 companies collectively contributed PKR 1.22 trillion in direct taxes, making up 23.6% of total direct tax collection. Among the leading sectors:
• Auto assemblers led the way with a remarkable 62% increase in tax contributions.
• Fertilizer manufacturers saw a 19% YoY rise due to a price surge in urea and DAP.
• Banks posted a 12% YoY jump in tax payments, driven by a late-year policy change that increased their corporate tax rate from 49% to 54%, including a 10% super tax.
• Cement manufacturers saw their tax burden rise by 34% YoY, benefiting from lower interest rates and higher profitability.
Meanwhile, some industries experienced declines in tax payments:
• Refineries recorded the sharpest drop at 47%, followed by chemicals (-30%), OMCs (-27%), and E&Ps (-18%).
• OMCs (Oil Marketing Companies) saw a 10% decline in tax contributions, mainly due to falling retail prices of MS and HSD, which squeezed revenues.
• The E&P sector faced a higher tax burden in 1HFY25 due to the absence of the depletion allowance reversal that had benefited companies in the previous fiscal year.
Outlook for the Final Four Months of FY25
As Pakistan enters the last four months of FY25, the government remains focused on achieving its tax collection targets through policy adjustments and economic growth initiatives. With KSE-100 firms playing a vital role, the capital market continues to be a major force in national revenue generation. However, the performance of key industries and global economic conditions will be crucial in determining the final tax collection figures for the year.