Budget 2025-26: Pakistan govt likely to bring YouTubers, freelancers into tax net
In its report titled 'Pakistan Federal Budget FY26 Preview', Topline Research said the government was expected to give a revenue collection target of Rs14.1-14.3 trillion to the Federal Board of Revenue (FBR), showing a year-on-year growth of 16-18% in tax collection in FY26 compared to FY25.
Out of this required 16-18% growth, 12% would be achieved through autonomous growth driven by real gross domestic product (GDP) growth of 3.6% and inflation of 7.7%.
'The remaining 4-5% growth translates into additional tax measures of Rs500-600 billion,' the report estimated.
The budget presentation for FY26 is scheduled for June 2, 2025.
Various institutions have recommended government for taxing income from social media platforms like YouTube, Tiktok amongst others. The initial proposal by the Institute of Cost and Management Accountants of Pakistan (ICMAP) was to implement tax rate of 3.5% on social media income. The institute expects additional collection of Rs52.5 billion (from social platforms), the report mentioned.
Tax on pensioners
Besides, the government is contemplating to impose a tax rate on pensioners in range of 2.5-5% on monthly pension of over Rs400,000 per month, the report said, citing media reports.
Last year, the government also tried to consider taxing this area. 'However, we believe, in FY26 budget government will impose a tax, aiming to raise Rs20-40 billion from this.'
In the first nine month of the ongoing fiscal year 2024-25, Pakistan has already spent Rs673 billion on pension cost, annualising to Rs0.9-1 trillion, the report said.
The Pakistan Bureau of Statistics (PBS) has already adapted a key measure wherein GST (general sales tax) on few commodities would be calculated based on the prices published by it. For example, in case of sugar, the GST was being calculated on Rs72.22 per kg while the market price surged to Rs150/kg. This change in base for GST calculation can fetch additional Rs70-80 billion annually.
'We expect this change to be incorporated in FY26 finance bill.'
Tax on ultra processed food items (health tax) is widely being circulated to 'bring health awareness and to reduce prevalence of obesity, type 2 diabetes, stroke, dental caries, cardiovascular disease and blood pressure'.
As a first step, the government is planning to increase FED (federal excise duty) on such items (like biscuits snacks) by 20% with objective to take total FED to 50% by FY29.
'We expect government to impose this tax in addition to increase in FED on cigarettes as well.'
The government has informed the International Monetary Fund (IMF) regarding removal of non-filer category. It has submitted a bill to the parliament, which if approved will restrict non-filers from engaging in key economic transactions such as vehicles and real estate purchase, according to the report.
The bill was taken under discussion by Senate committee and there were some technological changes required in FBR system to effectively implement this.
'We believe, this section 114C would be introduced in budget, however, after the debate, some changes in threshold levels or some relaxation in year 1 of its implementation cannot be ruled out.'
The government has also informed the IMF to considering imposing petroleum development levy (PDL) on furnace oil (FO) in addition to the levy already collected on petrol and diesel, Topline Research said.
Furthermore, the government also plans to increase PDL by Rs5/liter on petrol and diesel (HSD) in form of carbon tax to be implemented gradually in 2 years.
'If this is implemented, we believe government can collect additional Rs35-80 billion from PDL on FO sales assuming no changes on GST front and PDL imposed is in range of Rs40-78/liter.'
'IMF has assigned to collect a minimum Rs295 billion from retailers in the first half of FY26 (till Dec 2025) and has also added this as Indicative Target. We believe, government will take steps like increase in advance taxes on distributors etc to satisfy this IMF requirement,' the report said.
In October 2024, IMF report mentioned some tax measures for Pakistan including increase in FED by 5% on fertiliser and pesticide.
'With this step, government can raise incremental amount of over Rs30 billion it estimated.
'In our view, likelihood of increase in FED on both the products is high since this is IMF requirement.'
Among other tax measures, elimination of concessionary or reduced GST rate on remaining products is 'highly likely', removal of exemptions for FATA/PATA region is likely, implementation of agriculture income tax is likely by provincial governments, and increase in GST on luxury items like appliances aircraft, ships, jewellery, cosmetics, cigarettes, high-end mobile phones is also expected in FY26 budget.
In addition to this, the government is considering giving tax relieves to salaried people and real estate sector, reduce duties on import of vehicles or relaxation of age limit from 3 years to 5 years, and announce subsidy on housing finance, the report said.
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