Islamabad, November 23, 2025: Pakistan is set to introduce a comprehensive tax simplification strategy next year, a key step recommended by the International Monetary Fund (IMF) to strengthen governance and enhance public sector efficiency.
The strategy aims to streamline Pakistan’s tax system, reduce complexities, and improve the overall effectiveness of the Federal Board of Revenue (FBR).
According to an official IMF document, Pakistan has been advised to publish the tax simplification strategy by May 2026. The strategy will focus on several key areas, including:
• Simplifying Tax Structure: Reduce the number of rate schedules, special regimes, excessive withholding and advance taxes, rationalize tax exemptions, and limit discretionary rulemaking powers. Pakistan will also report annually on the reduction in the number and value of granted tax exemptions.
• Strengthening FBR Governance: Improve the organizational structure to align oversight with core objectives, reduce autonomy of field offices, enhance human resource management, and improve FBR’s ability to identify and mitigate key risks.
• Enhancing Accountability: Publish audit findings related to the Pakistan Revenue Automation Limited (PRAL) within 12 months and release a public report tracking FBR’s response to major audit recommendations.
• Improving Budget and PSDP Transparency: Strengthen top-down budget processes, limit in-year adjustments without parliamentary approval, enforce a 10% cap on new PSDP projects, retain high-priority initiatives, protect capital spending from mid-year cuts, and integrate parliamentarians’ projects into PSDP planning.
• Risk-Based Anti-Corruption Measures: Implement a risk-based framework to address corruption vulnerabilities in federal agencies. This includes publishing an action plan for the top ten agencies with the highest corruption risks and reporting annually on progress and risk reduction outcomes.
The IMF emphasized that these reforms are essential to address governance weaknesses that hinder public sector performance, improve fiscal discipline, and promote transparency.
Officials believe that the tax simplification strategy will reduce compliance burdens for taxpayers, increase transparency in revenue collection, and strengthen institutional governance across Pakistan’s public sector.
With implementation slated to begin next year, this move signals Pakistan’s commitment to modernizing its tax system and enhancing public accountability, aligning with international best practices recommended by the IMF.