The Federal Board of Revenue (FBR) has directed its field formations to scrutinise the tax records of more than 480 leading exporters after detecting what it termed an abnormal reduction in declared taxable income for tax year 2025. The move has triggered concern and uncertainty across the exporting community, coming at a time when the government has repeatedly pledged to promote export-led growth and reduce harassment by tax authorities.

According to FBR instructions issued to Chief Commissioners Inland Revenue, the decision follows an internal analysis that showed a significant number of exporters reduced their taxable income after amendments to Section 154 of the Income Tax Ordinance, 2001, introduced through the Finance Act, 2024. The amendment shifted the taxation of export proceeds from a final tax regime to a minimum tax framework.

The FBR has asked tax authorities to closely examine declarations of major exporters to identify inconsistencies or abnormal changes in reporting patterns. Where income reductions are found to be unjustified, field formations have been authorised to initiate legal action, including audits, reopening of cases and on-site postings, with detailed reporting required on recoveries and additional revenue generated.

Business bodies, including the Pakistan Business Council and Pakistan Retail Business Council, have expressed serious reservations over the directive, warning that it sends a negative signal to exporters already facing high taxes, elevated energy costs and delayed refunds. Exporters and tax experts fear the move could discourage further investment in export-oriented sectors.

The development contrasts with recent statements by the prime minister and senior economic ministers, who have emphasised a shift toward an export led growth model as the cornerstone of Pakistan’s economic strategy. Analysts caution that aggressive tax scrutiny without adequate safeguards may undermine confidence and weaken the very export base the government aims to strengthen.