Pakistan’s Federal Tax Ombudsman (FTO) has issued a pointed critique of the Federal Board of Revenue (FBR), calling for immediate action to establish a formal tax framework for cryptocurrency transactions within the country. The recommendation stems from the FBR’s perceived prolonged delay and lack of clear policy on taxing digital assets.
The FTO’s intervention follows a formal complaint lodged by a Pakistani cryptocurrency user under the Federal Tax Ombudsman Ordinance, 2000. The complainant highlighted the significant scale of crypto activity in Pakistan, estimating over 9 million active users, which ranks the nation 6th globally in crypto adoption. Despite this widespread use, the sector currently operates outside the formal tax system, resulting in a lack of documentation and revenue collection.
Referencing a State Bank of Pakistan position, supported by a Sindh High Court ruling (C.P. No. 7146/2019), the complainant noted that virtual currencies have not been deemed illegal. The user expressed a desire to comply with tax obligations on digital assets and urged the FBR to create a legal structure for recognizing and taxing crypto holdings and profits.
According to the FTO’s findings, the FBR’s Policy Wing failed to attend scheduled hearings regarding the complaint on February 7, February 20, and March 20, 2025. While the FBR submitted written comments arguing that crypto taxation was a policy matter beyond the FTO’s jurisdiction, the Ombudsman dismissed this claim. The FTO categorized the FBR’s inaction as potential maladministration under Section 2(3)(ii) of the FTO Ordinance, describing the lack of engagement as “the height of neglect, inattention, and ineptitude.”
The FTO emphasized the significant economic implications, noting that billions in commercial transactions are potentially occurring through cryptocurrency platforms without yielding any tax revenue for the national exchequer. At a time when Pakistan faces challenges with tax collection, the FTO suggested that taxing the crypto sector could represent a substantial new revenue stream.
Consequently, the FTO has recommended several steps for the FBR:
- Engage with the original complainant and other relevant stakeholders.
- Formulate a distinct and comprehensive tax policy specifically for cryptocurrencies.
- Prioritize the inclusion of this matter in the upcoming Finance Bill.
- Consult with technical experts and regulatory bodies to ensure an effective implementation process.
Additionally, the FTO has instructed the Member-IR (Policy) at FBR to investigate the repeated absence of the department’s representative from the hearings and take necessary disciplinary action.
This directive from the FTO signals a potential shift towards formalizing Pakistan’s burgeoning crypto economy, aiming to integrate digital currency activities into the regulated and taxed financial system.
