The federal government is set to introduce stringent measures against tax non-filers in the upcoming 2025-26 budget, in line with commitments made to the International Monetary Fund (IMF) amid ongoing loan negotiations.
Under the new rules, individuals who have not filed taxes will face a ban on purchasing vehicles and property. Additionally, non-filers will be restricted from conducting large financial transactions. This move aims to phase out the non-filer category entirely and strengthen Pakistan’s tax system.
IMF Loan Conditions Tightened
The IMF has intensified conditions tied to its loan program, highlighting external economic risks including rising US tariffs and regional tensions with India. The Fund has insisted on timely hikes in electricity and gas prices and the gradual removal of tax incentives previously granted to special economic zones.
Tax System Reforms in Progress
The Federal Board of Revenue (FBR) is actively working to reform the tax regime, focusing on transparency and enforcement by:
- Eliminating the non-filer category
- Utilizing third-party data to identify tax defaulters
- Implementing the Compliance Risk Management System in major cities (Islamabad, Karachi, Lahore) with plans to extend it to corporate tax units
Despite challenges, a 51% increase in tax filers was recorded in the traders and wholesalers segment following increased withholding tax on unregistered shopkeepers, although the Tajir Dost Scheme to tax retailers fell short of targets.
As Pakistan prepares the budget, widening the tax net and enforcing stricter actions on non-filers remain top priorities to meet IMF conditions and boost revenue collection.
