Islamabad, September 9, 2025 – The Federal Board of Revenue (FBR) has reaffirmed that tax concessions will continue to be available for scientific research in Pakistan for the tax year 2025–26.
These concessions, outlined in Section 26 of the Income Tax Ordinance, 2001, are designed to encourage businesses to invest in knowledge-based activities and innovation.
According to the updated law, any business incurring scientific research expenditure in Pakistan can claim a deduction, provided the spending is exclusively aimed at generating taxable income from business activities. This framework reflects the government’s strategy of linking tax relief with long-term economic growth through scientific advancement.
The Ordinance defines “scientific research” as any systematic activity in natural or applied sciences that develops human knowledge. Expenditures qualify if they are directed toward developing a business, including contributions made to recognized scientific research institutions. However, costs related to purchasing depreciable assets, immovable property, or exploring natural deposits are excluded.
The FBR emphasized that only certified institutions are eligible to be categorized as scientific research bodies, ensuring credibility and accountability in the use of such concessions. This provision provides companies with an opportunity to collaborate with universities and research centers while reducing their tax burden.
Experts believe that incentivizing research in Pakistan can enhance competitiveness, strengthen industries, and promote sustainable growth. By encouraging scientific exploration through tax incentives, the government hopes to foster innovation across sectors ranging from pharmaceuticals to information technology.
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Businesses should consult qualified tax professionals before making financial decisions.