IMF Cuts Pakistan FY26 Tax Collection Target to Rs 13.98 Trillion. The International Monetary Fund has revised Pakistan’s tax collection goal for FY2025-26, reducing it from Rs. 14,307 billion to Rs. 13,979 billion. This change appears in the IMF’s Second Review under the Extended Fund Facility, which evaluates Pakistan’s progress one year into the program. The revised figure shows the pressure the country faces in expanding its tax base during a slow economic recovery.
Tax-to-GDP Ratio Rises, but Challenges Remain
The review notes that combined efforts by the Federal Board of Revenue and provincial governments have raised total tax revenues to above 12% of GDP. This improvement signals better documentation and stronger compliance.
However, Pakistan’s long-term goal is much higher. The authorities plan to lift the tax-to-GDP ratio to 15%, a level needed to reduce public debt, support development spending, and create room for economic growth.
Why the Revised Target Still Matters
Although the target has been lowered, it remains ambitious. The government has committed to stronger enforcement so revenue growth continues. A more realistic target also allows the FBR to focus on sustainable gains instead of short-term pressure.
Key Measures Taken by the FBR
The IMF report highlights several initiatives already in place to improve revenue collection:
Increased Audits
More audits aim to identify underreporting and recover unpaid taxes.
Better Sales Tax and Withholding Compliance
POS systems and digital invoicing are helping close loopholes in retail and service sectors.
Broader Outreach Campaigns
The FBR has expanded awareness drives to encourage more people to file returns.
Physical Monitoring of Production
New tools help track actual production levels in industries known for misreporting.
These measures are slowly shaping a more accountable tax environment.
A New Compliance Roadmap in Progress
To prioritise reforms and manage resources better, the FBR is preparing a comprehensive compliance roadmap with IMF support.
This roadmap will:
- Identify high-impact areas
- Accelerate key interventions
- Improve enforcement timelines
- Strengthen the digital tax ecosystem
According to the IMF, the FBR is expected to fully implement actions in at least three priority areas under this accelerated plan.
What the Revised Target Means for Pakistan’s Economy
The updated target does not signal a retreat. Instead, it reflects a more practical approach based on economic realities. If the FBR delivers on its enforcement and compliance plan, Pakistan could still strengthen revenue collection and move closer to a stable fiscal path.
A higher and more sustainable tax base will:
- Reduce reliance on borrowing
- Support human development
- Boost public investment
- Improve confidence in economic policy
The next few months will show how effectively these reforms are carried out.
