Pakistan’s Prime Minister Shehbaz Sharif has ordered the Federal Board of Revenue (FBR) to complete a digital production monitoring system across all manufacturing sectors by December 31, 2026, to boost tax compliance and enforcement.
The directive, issued during a review meeting on Monday, mandates automated monitoring systems for sales tax purposes in industries ranging from cement and textiles to packaged food and electronics. The government aims to close the gap between actual and potential tax collections, which has seen an additional Rs1.3 trillion in revenue over the past three years—a 40% increase—due to enforcement measures.
Key Sectors and Implementation Timeline
The production monitoring system is already fully operational in the sugar, cement, tobacco, tiles, and fertilizer sectors. Installation is underway in textile, packaged water, juice, and milk industries, with equipment procurement completed. By October 15, steel, poultry, and tyre sectors will finalize equipment purchases, while tea, household electronics, leather, paper, and oil/ghee sectors will complete procurement by October 30. All sectors are expected to be fully monitored by December 31.
Nishat Mills, Al-Karam Textile, Al-Karam Cotton Mills, J.K. Spinning Mills, Soorti Enterprises, Interloop Limited, Faisal Spinning Mills, Ibrahim Fibres Limited, Sapphire Textiles Limited, and Nishat Chunian voluntarily installed systems. The PM commended these firms, emphasizing that businesses collecting taxes without depositing them face no concessions.
Tax Compliance and Enforcement
The FBR Transformation Team prepared a report highlighting the gap between tax potential and actual collections. The Ministry of Information Technology was directed to audit systems in other sectors.
Eight incubation centers had also been established nationwide to support startups, while 105 co-working spaces were operational to facilitate IT professionals, according to the meeting briefing.
Directives and Industry Reactions
The PM warned that businesses collecting sales tax from consumers but withholding the amount instead of depositing it in the government exchequer would not be entitled to any concession.
Federal Ministers Azam Nazeer Tarar, Dr Musadik Malik, Ahad Khan Cheema, and Shaza Fatima Khawaja attended the meeting, along with Minister of State Bilal Azhar Kayani and Prime Minister’s Adviser Haroon Akhtar.
The FBR reported that cameras are being used to monitor production as part of a faceless system. The PM directed officials to remove obstacles to installing automated systems. The meeting was further informed that global technology companies were being approached to help operationalise the Daanish IT Park Islamabad.
Additional tax enforcement measures over three years generated Rs1.3 trillion in revenue, with the PM commending the FBR Transformation Team for its efforts.