Govt cuts export tax deduction to 1.25%, rolls out faceless FBR model

Mettis Global reported that the government has cut the withholding on exporters' receipts to 1.25 per cent, down from 2 per cent. Bilal Azhar Kiyani, Minister of State for Finance and Revenue, unveiled the changes while addressing businesses at the Lahore Chamber of Commerce and Industry. The package also scraps super tax for exporters and for firms whose yearly earnings fall in the Rs150 million to Rs500 million band.

Firms earning over Rs500 million will see super tax drop from 10 per cent to 8 per cent. A new Tax Operating Model will bring audits and assessments under one centralised, faceless system driven by CRM, with orders built from returns, third-party data and preset parameters. Customs work is also moving to a faceless model, and FBR facilitation structures are being set up in Karachi, Faisalabad, Lahore and Sialkot, with Multan and Hyderabad to be added to that network as well.

Small traders can opt into a simplified scheme that is voluntary, and enrolled shopkeepers will generally avoid routine audits based only on discrepancies from earlier years. Audits remain possible if FBR records or outside sources expose unusual irregularities. Enrolled traders will also be exempt from acting as withholding agents and from installing POS machines. The government expects these steps to widen the tax base, improve compliance and push the FBR toward a technology-driven, facilitation-focused model.