Pakistan Business & Tax 3rd Weekly Update January 2026

Weekly Business & Tax Update Pakistan

(FBR, SECP, Provincial Taxes, PSEB)

(This Week’s Highlights – 12-17 January 2026)

Staying updated with Pakistan’s tax, regulatory, and business environment is critical for professionals, business owners, investors, and students. Below is a clear and simplified weekly roundup of the most important developments reported this week covering FBR, SECP, provincial taxes, PSEB.

FBR (Federal Board of Revenue) – Tax Updates

1.Data Sharing with SECP:
The Federal Board of Revenue (FBR) and the Securities and Exchange Commission of Pakistan (SECP) have operationalized enhanced real-time data sharing protocols to improve tax compliance.

Key Features of the Integration

1. Automated Verification: The systems are integrated via the eZfile portal (SECP) and the FBR IRIS portal, allowing for the immediate cross-verification of:

• Shareholder and Director Profiles: Ensuring that owners of registered companies are also registered and active filers with the FBR.
• Declared Revenues: Cross-referencing company financial statements filed with the SECP against tax returns submitted to the FBR to identify discrepancies.

1. One-Window Registration: New companies now receive their SECP incorporation and FBR National Tax Number (NTN) simultaneously through a single integrated process.
2. Ultimate Beneficial Owner (UBO) Registry: SECP has established a Corporate UBO Registry, which the FBR uses to trace the actual individuals behind corporate entities to prevent tax evasion and money laundering.
3. Broadening the Tax Base: This data-sharing initiative is a core part of the Compliance Risk Management (CRM) strategy, which uses AI and data analytics to identify non-filers and under-reporters.

Impact on Businesses

• Compliance Monitoring: Companies are now under continuous electronic monitoring, making it significantly harder to hide income or operate without filing tax returns.
• Streamlined Processes: While enforcement has tightened, the integration has also simplified the registration process for compliant businesses through the SECP eZfile system.

2.Provincial Taxes – Spotlight:

• Punjab Revenue Authority (PRA): Focus continues on expanding the sales tax on services net. Notices have been sent to large co-working spaces and digital marketing agencies for registration and past liability assessment.
• Sindh Revenue Board (SRB): Announced a voluntary disclosure scheme for the restaurant and café sector in Karachi for outstanding sales tax on services liabilities, valid until March 31, 2026.
• Khyber Pakhtunkhwa Revenue Authority (KPRA): Conducting audits of service providers in the construction and real estate development sector in Peshawar and Abbottabad.
• Balochistan Revenue Authority (BRA): Engaged with hotel and accommodation service providers in Gwadar to ensure compliance ahead of the peak business season.

SECP (Securities and Exchange Commission of Pakistan)

1.SECP & BoI Propose Decriminalization of Corporate Offences

SECP, in collaboration with the Board of Investment (BoI), proposed reforms to decriminalize minor corporate offences under the Companies Act.

The objective is to:

• Reduce unnecessary penalties for technical mistakes
• Promote ease of doing business
• Shift focus from punishment to compliance

Impact on businesses:

This is positive news for SMEs and startups, reducing fear of harsh penalties for procedural errors.

2.Strong Growth in Company Registrations

Digital Company Incorporation Boosted: SECP has reported a record 45% of new company incorporations in the last quarter of 2025 were completed entirely digitally via the e-Services portal, with average processing time reduced to under 24 hours. 99.9% of all new company incorporations are now completed entirely through digital platforms.

Key sectors:

• IT & software services
• E-commerce
• Professional services

What this indicates:

Business formalization and entrepreneurship in Pakistan continue to grow despite economic challenges.

3.Draft Regulations for ESG Reporting

 The SECP has released draft Environmental, Social, and Governance (ESG) Reporting Guidelines for listed companies. Public consultation is open until February 28, 2026, with phased implementation proposed from 2027;

Status of ESG Reporting Regulations (2026)

• Revised Guidelines (Dec 2025): The SECP released updated ESG Disclosure Guidelines in late 2025, which are now formally aligned with the Pakistan Green Taxonomy (PGT).
• Voluntary Period: Reporting remains voluntary for most listed companies until June 2029 to allow for capacity building and data system development.
• Mandatory Phase-In (Starting 2029): Mandatory reporting will be implemented in three distinct phases based on company size:

1. Phase 1 (July 1, 2029): Large listed companies meeting at least two of three criteria (Turnover > PKR 25b, Employees > 1,000, or Assets > PKR 12.5b).
2. Phase 2 (July 1, 2030): Medium-sized listed companies.
3. Phase 3 (July 1, 2031): All other listed companies and specific non-listed public-interest companies.

Key Reporting Requirements

The 2026 framework mandates that companies utilizing the ESG Sustain Portal disclose the following:

• Climate-Related Risks & Opportunities: Disclosures aligned with the International Sustainability Standards Board (ISSB) IFRS S1 and S2 standards.
• Pakistan Green Taxonomy (PGT) Alignment: Companies must identify activities that contribute to environmental objectives like climate mitigation and demonstrate they do "No Significant Harm" (DNSH) to other objectives.
• Social Safeguards: Mandatory reporting on compliance with minimum social safeguards.
  
   

PSEB (Pakistan Software Export Board)

1.Freelancer Portal Integration

The Pakistan Software Export Board (PSEB), in collaboration with the State Bank of Pakistan (SBP) and commercial banks, has successfully implemented enhanced systems to facilitate smoother and documented inflows of remittances for IT freelancers.

Key Details of the Integration

1. Formal Banking Channels: The initiative encourages freelancers to use formal banking channels to bring in foreign exchange, a key requirement for benefits like income tax exemptions and the retention of a percentage of earnings in Exporter's Special Foreign Currency Accounts (ESFCA).
2. Dedicated Accounts: The SBP established a comprehensive framework for banks to open and operate accounts for freelancers, including the Exporters' Special Foreign Currency Account (ESFCA). This allows for the retention of export proceeds concurrently with the primary PKR account.
3. Faster Processing and Documentation: The integrated system ensures foreign exchange payments are reconciled with local PKR deposits, helping freelancers obtain Proceeds Realization Certificates (PRCs) within 72 hours for tax and visa facilitation purposes.
4. Subsidized Loans and Benefits: Registration with the PSEB Freelancer Registration Portal is crucial as it unlocks government benefits, including access to subsidized collateral-free loans up to PKR 1.0 million and visa facilitation for those with a consistent remittance record.
5. Industry Collaboration: The PSEB actively works with the SBP to streamline inward foreign exchange remittances and ensure the banking channels meet the industry's evolving needs, including seeking feedback on existing purpose codes to improve accurate reporting of IT exports.

2.Export Rebate Claims:
As of January 2026, the claim that the tax rebate backlog for exporters has been fully cleared is contested. While the government has made significant efforts to expedite payments, recent reports indicate that substantial outstanding claims remain.

Current Status of Export Refunds (January 2026)

1. Ongoing Backlog: As of January 8, 2026, exporters estimated that outstanding sales tax refunds still reached approximately PKR 50 billion.
2. Processing Rate: The Federal Board of Revenue (FBR) typically releases about PKR 35 billion in refunds per month, which often falls short of the total incoming and outstanding valid claims.
3. Prime Minister's Directives: In a meeting on January 7, 2026, Prime Minister Shehbaz Sharif directed authorities to expedite institutional reforms to ensure timely payment of tax refunds to boost exports, indicating that the system is not yet fully cleared or automated.
4. Institutional Concerns: Multinational firms and major business chambers (OICCI and PBC) recently flagged "prolonged delays" in refund settlements as a major structural issue during consultations for the upcoming 2026–27 budget.

Specific Context for IT Exporters

For IT exporters specifically, the situation is as follows:

• Tax Credit Regime: Most IT exporters currently operate under a 100% tax credit regime or a reduced withholding tax (WHT) of 0.25% (available until June 2026), rather than a traditional cash rebate system.
• Income Tax Backlog: While sales tax is the primary source of the major backlog, exporters have raised growing concerns about mounting income tax refund claims for the current fiscal year (2025-26), which continue to strain corporate cash flows.
• FASTER System Issues: Although the FASTER system was designed to process refunds within 72 hours, it has reportedly remained inconsistent in practice, with many exporters experiencing delays of several months.

In summary, while the government has officially committed to "speedy payments," industry data and official directives from early 2026 suggest that a significant backlog remains across multiple export sectors, including IT.

3.Delegation to GCC:
The Pakistan Software Export Board (PSEB) is coordinating a high-level delegation of Pakistani IT and ITeS (IT-enabled services) companies to Saudi Arabia in February 2026 to explore business opportunities and nearshoring partnerships.

Delegation Details

1. Event: The delegation is set to participate in the WAM Saudi 2026 (World Advanced Manufacturing and Logistics Summit and Expo) in Riyadh from February 15 to 17, 2026.
2. Objective: The visit aims to position Pakistani IT companies as partners in Saudi Arabia's "Vision 2030" industrial transformation, focusing on nearshoring opportunities in areas like Industry 4.0, including smart factory systems, AI, IoT, cybersecurity, cloud services, and supply chain solutions.
3. Activities: Participating CEOs will have the chance to engage with regional buyers, participate in B2B meetings, and form partnerships with stakeholders in the GCC market.

Coordinated by the Ministry of IT and Telecom, this initiative seeks to increase Pakistan's technology exports to the Middle East. While Saudi Arabia is the main focus, the delegation also intends to enhance relationships across the GCC region, including the UAE.

 

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