Pakistan Federal Public Expenditure Review - Chapter 5 - Enabling a Modern and Efficient Tax System

Jul 19, 2026

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Chapter 5 analyzes how Pakistan’s federal tax system can be enabled to become modern and more efficient. It outlines the structure and reform dynamics, reviews revenue performance, and compares tax revenue internationally. The chapter discusses indirect and direct taxes, covering sales tax, federal excise duty on cigarettes, personal income tax, and corporate income tax. It concludes with policy recommendations for strengthening each tax area.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages39

Reading Time1 h 38 min

Chapter 5: Enabling a Modern and Efficient Tax System

5.1 Introduction

5.2 Overview of the Tax System

5.3 Discussion of Specific Taxes

5.4 Policy Recommendations

References

Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PAKISTAN FEDERAL PUBLIC EXPENDITURE REVIEW Chapter 5: Enabling a Modern and Efficient Tax System 2023 TABLE OF CONTENTS PREFACE ........................................................................................................... IV ABBREVIATIONS................................................................................................ VI CHAPTER 5: ENABLING A MODERN AND EFFICIENT TAX SYSTEM ........................ 1 5.1 Introduction ................................................................................................................... 1 5.2 Overview of the Tax System ........................................................................................... 4 5.2.1 Structure of the tax system and reform dynamics ...................................................................... 4 5.2.2 Revenue performance ................................................................................................................. 7 5.3 Discussion of Specific Taxes .......................................................................................... 11 5.3.1 Indirect Taxes ............................................................................................................................. 11 5.3.1.1 Sales Tax .............................................................................................................................. 11 5.3.1.2 Federal Excise Duty on Cigarettes ....................................................................................... 15 5.3.2 Direct Taxes ................................................................................................................................ 17 5.3.2.1 Personal Income Tax ........................................................................................................... 19 5.3.2.2 Corporate Income Tax ......................................................................................................... 21 5.4 Policy Recommendations ............................................................................................. 24 5.4.1 Sales Tax ..................................................................................................................................... 26 5.4.2 Personal Income Tax .................................................................................................................. 28 5.4.3 Corporate Income Tax................................................................................................................ 28 5.4.4 Federal Excise Duty on Cigarettes .............................................................................................. 29 REFERENCES ...................................................................................................... 31 List of Figures, Tables and Boxes FIGURES Figure 5.1: Total revenue, by source and year .............................................................................................................. 7 Figure 5.2: Tax revenue in international comparison .................................................................................................... 7 Figure 5.3: FBR-collected tax revenue, by source and year (% of GDP) ........................................................................8 Figure 5.4: FBR-collected tax revenue, by origin and year (% of GDP) ..........................................................................8 Figure 5.5: Tax revenue prediction, total tax revenue (actual vs. predicted) ................................................................8 Figure 5.6: Tax revenue prediction, corporate income tax revenue .............................................................................8 Figure 5.7: Tax potential, by revenue and expenditure (% of total potential) ........................................

FAQs

What is the focus of Chapter 5 in the Pakistan Federal Public Expenditure Review 2023?

The chapter focuses on enabling a modern and efficient federal tax system by examining structure, performance, and reforms across major tax types.

Which taxes are discussed in detail in this chapter?

It discusses indirect taxes (including sales tax and federal excise duty on cigarettes) and direct taxes (including personal income tax and corporate income tax).

What does the chapter provide at the end?

The chapter ends with policy recommendations targeting sales tax, personal income tax, corporate income tax, and federal excise duty on cigarettes.

Jul 19, 2026

Upload by Patrick