Pakistan’s Federal Board of Revenue collected over Rs13 trillion in tax revenue in fiscal year 2025-26, surpassing its downwardly revised annual target of Rs12.983 trillion by Rs21 billion in what the government described as a historic first for the tax authority (Arab News; Dawn). Prime Minister Shehbaz Sharif praised the FBR’s performance and said structural reforms at the tax body were being accelerated following the achievement.
The outperformance was driven primarily by stronger-than-expected income tax receipts — a consequence of the economic stabilisation that followed Pakistan’s IMF programme, the formalisation push, and the expansion of withholding tax coverage that has broadened the tax base even without bringing large numbers of new filers into the formal self-assessment system. Sales tax and customs collections also contributed, reflecting higher import values as the rupee stabilised and import restrictions were eased under the IMF programme.
The Rs13 trillion figure represented a significant increase over FY25 and marked the first time FBR collections crossed the Rs13 trillion threshold. The previous year’s collection had also set a record but missed its original target; FY26 beat the revised target on both measures.
The FY27 challenge
The achievement sets up an immediate tension with the next year’s ambitions. The IMF, in its structural benchmarks for FY2026-27, has pushed for a tax target of Rs15.6 trillion — an increase of approximately Rs2.6 trillion, or 20%, over FY26 actual collections (Express Tribune). The FBR has indicated internally that it cannot realistically collect more than Rs15 trillion given current administrative capacity and the tax base’s constraints, leaving a gap of Rs600 billion between what the IMF wants and what the FBR believes is achievable.
Closing that gap without significantly broadening the tax net — which would require bringing agriculture, the real estate sector, and the large informal economy into the formal system — would mean either hitting existing taxpayers harder or relying on improved administration. Pakistan’s IMF programme requires the government to attempt both simultaneously, while the political economy of agricultural taxation and real estate documentation reform makes both deeply contested.
The FBR is also under pressure to shift from human-intensive to digital and “faceless” tax processing to reduce corruption and improve compliance. Progress on that digitalisation has been uneven.
