Islamabad, 6 June 2025: Govt Ends Tax Holiday as part of sweeping fiscal reforms outlined in the upcoming federal budget, with the Federal Board of Revenue (FBR) proposing a 10% sales tax on goods produced in the previously exempt ex-FATA and PATA regions.
The move signals a shift in the government’s policy toward integrating these areas more fully into the national tax structure.
Sources close to the matter confirmed that the FBR has also recommended eliminating tax exemptions on the import of plant, machinery, and raw materials by industries operating in the former tribal districts.
These exemptions, which have been in place under the Sixth Schedule of the Sales Tax Act, are expected to lapse starting from the next financial year.
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The proposals form a key part of a broader strategy aimed at enhancing revenue generation to meet Pakistan’s ambitious Rs14.3 trillion tax collection target for FY2025–26.
Govt Ends Tax Holiday not only reflects the government’s commitment to fiscal consolidation but also aligns with structural reforms demanded by the International Monetary Fund (IMF).
The IMF has urged Pakistan to significantly boost its tax-to-GDP ratio, emphasizing that domestic resource mobilization is essential for macroeconomic stability. By bringing the ex-tribal areas into the formal tax net, authorities aim to widen the base and ensure a more equitable contribution to national revenue.
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Analysts note that while the measures may face resistance from local stakeholders, they are likely to be positioned as necessary steps toward fiscal uniformity and economic integration.
Govt Ends Tax Holiday is expected to be among the more contentious components of the forthcoming budget, as it challenges long-standing tax exemptions granted to promote development in the newly merged districts.
