Pakistan tax-to-GDP ratio up 1.5 percentage points as PM orders stricter oversight of informal economy
The tax-to-GDP ratio reached 10.6 percent by the end of June 2025, up from 9.1 percent the previous year, according to a briefing at a review meeting chaired by the prime minister in Islamabad.
The government aims to continue raising the ratio under a wider economic and structural reform efforts backed by the International Monetary Fund (IMF), which includes digitization of the Federal Board of Revenue (FBR), the country's tax collection agency, to improve enforcement and expand the tax base.
'Digitization at the FBR has helped meet targets, but steps must now be taken to ensure the system becomes sustainable,' the prime minister was quoted as saying in a statement released by his office. 'Enforcement must be strengthened further to curb the informal economy.'
The meeting was told that total tax revenue collected in FY2024–25 crossed Rs20.4 trillion ($71.4 billion), while the number of income tax return filers jumped from 4.5 million in 2024 to over 7.2 million by June 2025.
Officials credited the increase to enhanced enforcement, including reforms in the retail sector, integration of point-of-sale systems and an expanded digital footprint.
They said tax revenue from the retail sector alone rose by Rs455 billion ($1.6 billion) compared to the previous year.
The prime minister instructed FBR to fast-track the restructuring of its digital wing, set deadlines for implementation and consult with all stakeholders, including taxpayers and the business community, to ensure the reform process remains inclusive.
He also praised FBR officials and directed them to present actionable targets for the next phase of reforms within a week.
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