Moaaz Manzoor

Pakistan’s tax administration is projected to sustain its upward momentum in fiscal year 2025-26, with the Federal Board of Revenue (FBR) expected to collect nearly Rs13.9 trillion, reflecting improved compliance, expanded taxpayer participation, and stronger enforcement measures.

The country’s total tax collection is estimated at Rs13,918.9 billion during FY26, marking a 9.4 percent increase compared to Rs12,722.9 billion recorded in FY25, according to the Pakistan Macroeconomic Outlook FY2026 released by the Research and Publications Department of the Institute of Cost and Management Accountants of Pakistan (ICMA).

The projected rise continues a steady growth trajectory observed over recent years. In FY24, FBR collections stood at Rs10,085.2 billion, indicating that tax revenues have expanded by nearly Rs3.8 trillion within two fiscal years. The report notes that this consistent improvement signals strengthening revenue administration and better documentation of economic activity.

Early data from the current fiscal year show sustained performance. During the first half of FY26, from July to December, tax receipts amounted to Rs6,154.8 billion, suggesting that collection momentum remains intact. The mid-year figures indicate that the annual target is supported by broad-based revenue flows rather than temporary or one-off gains.

ICMA attributes the improvement primarily to structural and administrative reforms aimed at widening the tax net and increasing efficiency. Enhanced enforcement actions, tighter monitoring of non-filers, and greater use of digital systems have helped strengthen compliance and reduce leakages. Expanded taxpayer registration and improved audit processes have also contributed to more reliable and transparent collections.

The report highlights that revenue growth driven by compliance and administrative efficiency is more sustainable than reliance on higher tax rates. Strengthening systems and improving documentation can support long-term stability while minimizing additional burdens on businesses and individuals.

A stronger revenue base is considered essential for fiscal planning and public service delivery. Consistent tax mobilisation provides the government with predictable financial resources to fund development programmes, social services, and administrative operations. Improved collection capacity also supports better budget management by reducing uncertainty around inflows.

ICMA notes that maintaining reform continuity will remain key to sustaining the upward trend. Further integration of digital tools, improved data sharing, and continued expansion of the documented economy are seen as important steps to enhance transparency and fairness within the taxation system.

With collections projected to approach Rs13.9 trillion, FY26 could mark another milestone for Pakistan’s revenue administration. The outlook underscores that systematic compliance measures and stronger institutional capacity are gradually reinforcing the country’s fiscal framework and laying the groundwork for more stable public finances.

Credit: INP-WealthPk