Pakistan’s tax-to-GDP ratio fell to 7.19% during the first nine months of FY26 despite a 10% increase in FBR tax collection to Rs9.31 trillion, as economic growth outpaced revenue expansion.
The FBR is planning to introduce an AI-based tax monitoring system through Finance Bill 2026 to detect false declarations in tax returns, curb tax evasion, and improve transparency through automated digital enforcement and compliance monitoring.
The government is considering Rs780 billion in enforcement measures for Budget 2026-27 instead of imposing new taxes, while planning possible relief for salaried individuals and businesses.
FBR has clarified that the 147-page tax return form for tax year 2026 is not meant to complicate filing, saying most salaried individuals and businesses will only need to fill 8 to 15 rows as the authority moves toward AI-based pre-filled tax returns.
FBR has proposed new tax enrolment rules for foreign NGOs, making embassy verification, Interior Ministry NOC, MoU with Pakistan and detailed ownership disclosures mandatory under amendments to the Income Tax Rules, 2002.
Finance Minister Muhammad Aurangzeb says AI-powered monitoring and digital tax reforms are helping reduce revenue leakages, improve compliance, and expand Pakistan’s tax base ahead of Budget 2026-27.
The Federal Board of Revenue reported a 37% increase in revenue paid with income tax returns during tax year 2025, with collections rising to Rs222 billion amid higher voluntary tax payments and improved compliance efforts.
The OICCI has urged the government to raise the taxable salary threshold to Rs1.2 million in Budget 2026-27 and reduce the tax burden on salaried individuals, citing rising inflation and high effective tax rates of up to 38.5%. The chamber also called for lower tax slabs and abolition of the 10% surcharge on salaried income.
The government is working to revive around $6 billion in refinery investments by addressing tax and policy issues that have stalled major upgrade projects. Officials are considering sales tax exemptions on machinery imports and policy stability measures to restore investor confidence and move forward with refinery modernization under the Brownfield Refinery Policy.
FBR has warned taxpayers to properly declare all property details in tax returns for 2026, stating that undeclared assets identified through database matching may lead to penalties, notices, and legal action under tax laws.