FBR’s Tax Overhaul Gets $70M World Bank Boost

The World Bank is likely to approve an additional $70M in IDA credit for the Federal Board of Revenue (FBR). This will support FBR’s new Transformation Plan, which aims to improve tax collection and simplify the system.

Pakistan’s tax system raises little revenue and places a high burden on the poor. Weak compliance, heavy exemptions, and enforcement challenges limit collections. The additional financing brings the total project amount to $470M and extends its duration to June 30, 2027.

The funding will help digitize FBR operations, enhance enforcement, and introduce new anti-smuggling measures. It also supports technical assistance, infrastructure upgrades, and institutional reforms. Asian Development Bank (ADB) is also expected to fund a separate project by mid-2026 to assist with tax administration improvements.

Pakistan’s tax-to-GDP ratio remains low at 10.5% in FY24. Raising it to 15% by 2035 is a key goal. Improved revenue collection will reduce fiscal deficits, ease debt burdens, and fund essential public services.