FBR Targets Tax Evasion in Retail, Real Estate, and Tobacco Sectors Amid IMF Commitments

According to the IMF’s recent Extended Fund Facility (EFF) review, the Pakistani government is intensifying efforts to improve tax compliance by:

• Leveraging its Customer Relationship Management (CRM) system to detect non-compliant entities.

• Increasing the number of auditors to strengthen enforcement capabilities.

• Continuing mass notifications and nudging campaigns to promote voluntary compliance.

Retail Sector: Expanding Point-of-Sale Integration

To boost retail tax compliance, the FBR will expand the number of businesses integrated into the Point-of-Sale (POS) system. This digital initiative aims to curb under-reporting by enabling real-time transaction monitoring. The government will also intensify oversight of importers, particularly those showing suspicious or irregular import patterns, as part of its broader anti-smuggling and revenue mobilization strategy.

Real Estate Sector: High-Risk Audit Focus

In the real estate sector, known for significant underreporting and tax avoidance, the FBR is prioritizing tax audits of high-value transactions and unregistered developments. This aligns with broader reforms aimed at formalizing the sector and expanding the national tax base.

Tobacco Sector: Smuggling and Tax Fraud Crackdown

To tackle widespread tax evasion in the tobacco industry, especially in the informal market, the government is implementing a robust enforcement plan, which includes:

• Comprehensive audits of acetate tow imports, often misclassified to evade duties.

• Mandating the use of bonded warehouses for such imports.

• Restricting imports to registered tobacco and filter manufacturers only.

• Banning transit imports to Afghanistan, a known channel for illegal diversion.

Additionally, to improve revenue collection and ensure compliance, the FBR will enhance its track-and-trace system to monitor production in real-time. This system will be supplemented by reinforced anti-smuggling operations and checkpoint monitoring, particularly in northwestern regions where smuggling routes are prevalent.