IMF has lowered Pakistan’s FBR tax collection target for FY26 to Rs 13.98 trillion, while pushing for deeper reforms to raise the tax-to-GDP ratio.
Revised Tax Target Under IMF Programme
The International Monetary Fund (IMF) has revised Pakistan’s tax collection target for the next fiscal year. Under the latest assessment, the Federal Board of Revenue (FBR) is now expected to collect Rs 13,979 billion in 2025–26. This is lower than the Rs 14,307 billion target originally approved in the federal budget for FY26.
The revision has been shared in the IMF’s Second Review under the Extended Fund Facility (EFF). While the headline number has been brought down, the overall direction of policy remains the same – Pakistan is still required to expand its tax base and improve compliance so that revenues keep growing in a sustainable way.
Tax-to-GDP Must Rise to 15 Percent
According to the IMF review, one year into the EFF-supported programme, combined efforts by the FBR and provincial governments have pushed general government tax revenues to above 12 percent of GDP. This marks a small but important improvement compared to previous years when Pakistan struggled to cross this level.
The Fund has stressed that maintaining this momentum is essential. Pakistan’s own plan is to raise the tax-to-GDP ratio to around 15 percent over the medium term. If achieved, this would support a reduction in public debt, create more space for investment in health, education and infrastructure, and help lift long-term economic growth.
How the FBR Is Trying to Boost Revenues
To move towards the revised Rs 13.98 trillion target, the FBR has already deployed a set of measures aimed at improving tax collection. These include increasing the number and quality of audits, widening the use of point-of-sale (POS) systems in shops and businesses, and expanding digital invoicing so that sales are recorded more accurately.
The tax authority has also intensified outreach campaigns to encourage people and businesses to file returns on time. In addition, the FBR is using different monitoring tools to physically track the production of taxable goods in sectors such as sugar, cement and beverages, where under-reporting has historically been a problem.
Compliance Roadmap and Priority Reforms
To better target these interventions, the IMF report notes that the FBR, with technical support from the Fund, is preparing a comprehensive roadmap for compliance improvement. This roadmap will set an accelerated timeline for putting new systems and enforcement measures in place.
Based on this roadmap, the FBR will be required to fully implement all actions in at least three priority areas. These may include deeper use of data analytics, tighter enforcement against non-filers and under-filers, and stronger coordination with provincial tax bodies. The idea is to focus resources where the revenue gains are likely to be the highest.
What It Means for Taxpayers and the Economy
For ordinary taxpayers and businesses, the revised target does not mean that the pressure to pay taxes will reduce. On the contrary, the IMF and the government both want a wider share of the economy to enter the tax net, so that the burden does not fall only on a small group of formal sector companies and salaried individuals.
If reforms succeed, Pakistan could see more stable public finances, lower borrowing needs and greater room for development spending. However, if the FBR fails to meet its targets, the authorities may be forced to consider additional revenue measures in future budgets. For this reason, how effectively the new compliance roadmap is implemented will be closely watched by both the IMF and local stakeholders.
