ISLAMABAD: Despite repeated assurances by Prime Minister Shehbaz Sharif to facilitate and promote exporters as part of an export-led growth strategy, the Federal Board of Revenue (FBR) has directed scrutiny of tax records of more than 480 of the country’s leading exporters. The move has sparked anxiety across the export community, with business bodies warning that such actions risk undermining investor confidence at a time when exports are being positioned as the backbone of economic recovery.
According to official instructions issued by the FBR to all Chief Commissioners Inland Revenue earlier this week, the tax authority has ordered field formations to closely examine the tax declarations of major exporters operating within their jurisdictions. The scrutiny follows an internal analysis conducted at FBR Headquarters, which found that a significant number of exporters, including individuals, associations of persons, and companies, reported substantial reductions in taxable income for Tax Year 2025.
The FBR linked this trend to amendments introduced through the Finance Act, 2024, which modified Section 154 of the Income Tax Ordinance, 2001. Under the amendment, taxation on export proceeds was shifted from a final tax regime to a minimum tax regime. The authority has expressed concern that some exporters may have adjusted their declarations in ways that indicate abnormal reductions or inconsistencies following the change in law.
In its directive, the FBR instructed officers to identify cases where taxable income appears to have been reduced without reasonable justification. In such instances, field formations have been authorized to initiate action in accordance with the law. Chief Commissioners have also been asked to compile and submit detailed reports on the exporters falling into this category, including actions taken and outcomes achieved.
The decision has triggered strong reactions from the business community. Both the Pakistan Business Council and the Pakistan Retail Business Council have voiced concern, arguing that the move sends a negative signal to exporters already grappling with high taxation, elevated energy costs, and significant delays in the processing of refunds. Industry representatives say the directive contradicts the government’s stated objective of ending unnecessary harassment by tax officials.
A tax expert familiar with the matter told Business Recorder that the FBR’s direction letter, numbered 163507-R and dated 30 December 2025, goes beyond routine scrutiny. The annexure attached to the letter reportedly recommends audits under Section 177, reopening of cases under Section 122(5A), proceedings under Section 175C, and even the posting of tax officers at exporters’ premises. Additionally, Chief Commissioners have been instructed to report on assessments made, demands raised, and additional revenue collected under various provisions of the Income Tax Ordinance, including Sections 147, 177, and 122(5A).
Exporters and tax advisors have described the directive as deeply discouraging, warning that it may deter further investment in export-oriented sectors. They argue that while compliance and transparency are essential, aggressive enforcement at this stage risks damaging trust between the government and the private sector.
The timing of the FBR’s action has further intensified criticism, as it comes alongside repeated public statements by senior government leaders in support of export-led growth. Prime Minister Shehbaz Sharif reiterated this vision while chairing a tax reform meeting on 2 December 2025, attended by senior ministers and policymakers. Finance and Revenue Minister Muhammad Aurangzeb has also stated that Pakistan is moving away from a consumption- and debt-driven model toward one anchored in exports.
Planning and Development Minister Ahsan Iqbal has championed exports as central to his Uraan Pakistan vision, which aims to transform Pakistan into a one trillion dollar economy by 2035. Similarly, Minister for Industries Haroon Akhtar Khan has emphasized the need to make tariffs an engine of export growth rather than a barrier to trade.
Experts note that export-led growth relies on creating a stable and supportive environment for exporters, enabling them to leverage comparative advantages, generate foreign exchange, create employment, and attract investment. They caution that conflicting signals from policy and enforcement authorities could weaken this strategy at a critical juncture for Pakistan’s economy.
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