The Federal Board of Revenue (FBR) has directed a detailed review of tax records for over 480 of Pakistan’s leading exporters, raising concerns and uncertainty within the export sector.
The instruction, issued to all Chief Commissioners Inland Revenue on December 30, targets exporters whose taxable income showed a sharp decline in Tax Year 2025 without reasonable justification. FBR sources noted that many exporters reported lower taxable income following changes introduced by the Finance Act 2024, which shifted export proceeds from a final tax regime to a minimum tax structure under Section 154 of the Income Tax Ordinance, 2001.
Field formations have been asked to examine declarations for abnormal patterns, inconsistencies, or sudden income reductions. Where discrepancies are found, officials are instructed to initiate actions under relevant provisions, including audits under Section 177, reopening assessments under Section 122(5A), and posting tax officers at exporters’ premises under Section 175C. Detailed reports on actions, assessment orders, tax demands, and additional revenue collected are due by January 1, 2026.
The move has alarmed the business community. The Pakistan Business Council and Pakistan Retail Business Council warned that such enforcement sends a negative message to exporters at a time when the government is promoting export-led growth. Tax experts describe the directive as more aggressive than routine risk-based scrutiny and caution that it could discourage exporters already facing high energy costs, elevated taxes, and delayed refunds.
The directive appears at odds with recent government statements emphasizing export growth as a priority. Prime Minister Shehbaz Sharif, Finance Minister Muhammad Aurangzeb, Planning Minister Ahsan Iqbal, and Industries Minister Haroon Akhtar Khan have all highlighted export promotion, tariff reforms, and investment in trade as central to Pakistan’s economic recovery and long-term growth goals. Exporters argue that heavy-handed enforcement could undermine confidence and investment, potentially straining relations between industry and tax authorities at a critical time.
