Revenue collection falls short despite enforcement and compliance measures
Pakistan’s Federal Board of Revenue (FBR) closed fiscal year 2025-26 with a tax collection shortfall of approximately Rs978 billion against the revised annual target agreed with the International Monetary Fund (IMF).
According to official figures, the FBR collected Rs13.001 trillion during the fiscal year, compared with the revised target of Rs13.979 trillion retained during the IMF’s May review. The original annual revenue goal, jointly agreed by the government and the IMF in June last year, stood at Rs14.13 trillion before authorities revised it downward because of slower-than-expected revenue growth and challenging economic conditions.
Despite the lower benchmark, the revenue authority remained unable to achieve the revised target, reflecting continued fiscal pressures throughout the year.
Economic slowdown weighs on tax receipts as new targets loom
Officials attributed the revenue shortfall to subdued economic activity, lower import volumes and broader macroeconomic challenges that reduced tax collections across several sectors. Nevertheless, they stated that the FBR continued implementing enforcement initiatives, administrative reforms and compliance measures aimed at broadening the tax base and improving revenue performance.
Meanwhile, the tax authority processed refunds worth billions of rupees during the fiscal year, particularly for exporters, to support business activity and improve liquidity within the export sector.
A breakdown of collections showed that income tax remained the largest source of revenue, followed by sales tax, customs duties and the Federal Excise Duty (FED).
Looking ahead, the government is expected to establish a significantly higher tax collection target for fiscal year 2026-27. Consequently, the FBR is likely to strengthen enforcement actions, expand documentation of the economy and introduce additional compliance measures to narrow the revenue gap and meet future fiscal commitments under the country’s economic reform programme.
