Tax Policy Office Moves Under Finance Ministry, Shifting Budget Role from FBR

The Tax Policy Office of Pakistan will now operate under the Ministry of Finance, as declared by Finance Minister Muhammad Aurangzeb. This adjustment removes the Federal Board of Revenue’s (FBR) responsibility for the annual budget preparation.

During a workshop on capital market potential, Aurangzeb stated, “The Tax Policy Office has been relocated to the Finance Division. The FBR will no longer handle policy matters. The Finance and Tax Policy Office will spearhead the budget presentation for fiscal year 2027, scheduled for 2026.” The Securities and Exchange Commission of Pakistan (SECP) and the Pakistan Banks Association (PBA) jointly hosted the workshop.

Government to Unveil Industrial Policy Soon

The government is actively formulating an industrial policy aimed at fostering a conducive environment and boosting industrial growth nationwide.

Aurangzeb mentioned, “Haroon Akhtar is dedicated to finalizing the industrial policy for cabinet approval and subsequent announcement. This policy is crucial for transitioning from stability to sustainable growth, as it addresses fundamental pillars.” He added that recent policy announcements cover tariffs, electric vehicles, the digital sector, and the establishment of a cashless economy.

Tariff Reforms to Enhance Export Competitiveness

Aurangzeb discussed planned tariff reforms targeting export industries, emphasizing the need to gradually reduce customs duties, additional customs duties, and regulatory duties over the coming years.

“These reductions are vital for improving export competitiveness and eliminating long-standing protections for specific industries.” He clarified that while various institutions, including the World Bank, have provided assistance, the IMF is not involved. “Tariff reforms are a homegrown initiative designed to enhance industry competitiveness.”

He acknowledged concerns from the finance ministry and FBR about potential revenue losses due to tariff reductions. However, he stressed the importance of long-term vision over short-term revenue concerns to support sustainable growth and competitiveness.

Call for Corporate Sector Engagement in Capital Markets

Aurangzeb observed the limited presence of the corporate sector at the workshop, despite their crucial role in capital market development through fundraising activities.

He proposed the creation of a capital market development council to mobilize funds via domestic markets such as the Pakistan Stock Exchange (PSX). Key stakeholders would include the SECP, State Bank of Pakistan, PBA, corporations, insurance companies, and provincial representatives, given the provinces’ increasing execution authority.