Direct Taxes to Contribute Half of Pakistan’s Tax Collection in FY27: FBR

The Federal Board of Revenue (FBR) expects direct taxes to account for around 50 percent of Pakistan’s total tax collection during fiscal year 2026-27.

According to the FBR’s latest revenue forecasting report, direct taxes are projected to maintain their dominant share of total tax revenue during FY27, reflecting an ongoing change in the country’s tax structure.

The report said the growing share of direct taxes represents a move toward a more balanced and equitable tax system by reducing dependence on indirect taxes, which are largely collected through consumption and trade..

The FBR noted that a higher share of direct taxes generally improves fairness in the tax system, as income based taxation is considered more progressive than indirect levies. It also helps reduce the government’s exposure to fluctuations in consumption and international trade.

According to the report, direct taxes are also expected to provide more stable revenue over the medium term, particularly as Pakistan continues implementing documentation, digitization, and tax compliance reforms.

The FBR said the projected increase in revenue, along with the changing composition of tax collection, reflects not only higher tax receipts but also improvements in the overall quality of revenue mobilization. It added that the shift would strengthen fiscal sustainability and support the government’s objective of building a more resilient and equitable taxation system.