Finance Minister: Tax Overhaul Plans In The Second Half Of 2025

Image of Finance Minister Muhammad Aurangzeb speaking at a conference podium. — Credit: APP

Pakistan’s finance minister outlines reforms, including a simplified tax form and accelerated privatisation, to foster economic stability.

Finance Minister Muhammad Aurangzeb announced a simplified income tax return form for salaried taxpayers and plans for faster privatisation of state-owned enterprises on Wednesday, August 27, 2025, in Islamabad, aiming to create a predictable tax policy and reduce corruption through structural reforms at a public financial management conference.

Finance Minister’s Push for Tax Reforms

At the conference titled “Building a Resilient Public Financial Management Ecosystem”, organised by the Institute of Chartered Accountants of Pakistan and the Chartered Institute of Public Finance and Accountancy, the finance minister highlighted efforts to streamline tax processes. The simplified income tax return form reduces required fields from 800 to 40, targeting nearly 80% of salaried taxpayers. Published on the Federal Board of Revenue website, it is open for a 40-day public consultation period.

The finance minister emphasised the need for a people-friendly tax system, stating that tax policy must be based on sound economic reasoning to avoid erratic decisions that harm domestic industry. He noted that inconsistent past policies have eroded confidence, and the government is committed to stable frameworks. Tax policy functions have shifted from the Federal Board of Revenue to the Ministry of Finance to improve strategic coherence.

Accelerating Privatisation and Industrial Policy

The finance minister reaffirmed the government’s commitment to faster privatisation, including mergers or closures of loss-making state-owned enterprises to curb corruption and boost efficiency. A new industrial policy is in development to attract long-term investments and restore investor trust. Tariff reforms are also underway to counter excessive protectionism and promote global integration.

The finance minister identified population growth and climate change as major threats, urging the accounting community to support sustainable financing. He stressed aligning financial systems with international standards for better governance.

Insights from Other Speakers

Institute of Chartered Accountants of Pakistan President Saif Ullah expressed commitment to transparency and capacity-building, thanking collaborators for advancing governance reforms. Federal Minister for Climate Change Musadik Malik called for sustainable practices. Privatisation Minister Muhammad Ali provided updates on financial reforms.

Ross Smith from the International Public Sector Accounting Standards Board presented on global standards for transparency. Other participants included officials from the Securities and Exchange Commission of Pakistan, the Auditor General’s office, and the State Bank of Pakistan.

Background

Pakistan’s tax-to-GDP ratio remains low, prompting ongoing reforms to broaden the base and enhance collection. Recent measures include a 30% increase in tax revenue, as noted in prior statements. The simplified form builds on earlier notifications, such as SRO 1561(I)/2025 and SRO 1562(I)/2025, issued in mid-August 2025 for various taxpayer categories. Privatisation efforts align with commitments to reduce fiscal burdens from state entities.

What’s Next

The 40-day consultation on the tax form could lead to final implementation for the 2025 tax year, with stakeholders monitoring impacts on compliance. An IMF delegation visit by September 2025 may review these reforms.

As these changes progress, the finance minister’s agenda could reshape tax payer engagement and economic governance in Pakistan.

Published in SouthAsianDesk, August 28th, 2025

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