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Print Print edition: 2025-09-24

Tax expenditure remains at 2.1pc of GDP

Published Updated

ISLAMABAD: Pakistan’s tax expenditure remained at 2.1 percent of the gross domestic product (GDP), which is significantly lower than the global average of 4.0 percent.

According to the Tax Expenditure Report-2025, the tax expenditure estimates for Pakistan, as a percentage of GDP, are lower when compared to global averages. Over a 15-year period, Pakistan’s tax expenditure remained at 2.1 percent of GDP, which is significantly lower than the global average of 4.0 percent.

The tax expenditure estimates for OECD countries from 2010 to 2024 ranged between 4.5 percent and 5.4 percent of GDP. The average tax expenditure rate over this 15-year period stands at 4.9 percent

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The total tax expenditure estimate for 2023-24 is Rs. 2,434.73 billion, which accounts for 2.32 percent of the GDP and 26.18 percent of the total tax collection by the Federal Board of Revenue (FBR) during this period. Among the various taxes, the Tax Expenditure for Sales Tax was the highest, amounting to Rs. 1,237.11 billion, followed by customs duty at Rs. 652.39 billion, and Income Tax at Rs. 545.23 billion.

In 2023-24, the proportion of total tax expenditure attributable to Sales Tax has decreased, while the share of Income Tax and Customs Duty expenditure has risen, the report added.

Copyright Business Recorder, 2025

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