Page 8 - CMA Journal (May-June 2025)

Exclusive Interview

aligning rates with regional benchmarks to promote
horizontal and vertical equity. Further, the direction of
The FBR’s FY26 revenue travel has changed after long, where the most relief has
been given to the formal salaried class, corporates and
target, requiring 22% growth construction sectors. The direction is clear: a fairer,
simpler, and more progressive tax system.
(vs. 26% already achieved in
ICMA: Are there any plans to promote savings and
FY25 despite very low investment, especially in productive sectors?

inflation), is rooted more in Khurram Schehzad: Yes. FY26 promotes productive
investments via targeted financing schemes and
ongoing enforcement, not reduced input costs. Through collaboration with banks
and PBA, PKR 200 billion in youth loans, EV financing for
new taxes women and gig workers, and a 36% increase in SME
credit lines have been launched. Tariff reforms further
reduce cost burdens on manufacturers. Coupled with a
credible debt trajectory and controlled inflation, these
A total of around Rs. 865 billion was collected through measures will help improve domestic savings and
enforcement in FY25 - a historic achievement. With
investment. The emphasis is on inclusive
continued economic recovery and digital expansion, FBR entrepreneurship and long-term capital formation
is expected to meet the target while creating room for
across emerging sectors.
future tax rationalization. The government’s strategy
reflects fiscal discipline aligned with social inclusion, ICMA: How is the government addressing the energy
economic growth, and fairness. sector’s circular debt problem?

ICMA: What is the expected impact of the budget on Khurram Schehzad: The government has rolled out a
economic revival and growth in the country? landmark PKR 1.275 trillion circular debt resolution plan
with no additional burden on consumers. This
Khurram Schehzad: The FY26 budget is crafted as a
unprecedented move, designed with banking sector
growth catalyst. It redirects expenditure from input, aims to restore financial sustainability in the
unproductive subsidies toward high-return
energy chain. It complements other reforms like energy
sectors—agri-tech, housing, SMEs, EVs and youth conservation, EV adoption, and solarization. By
businesses. These allocations are designed to foster
addressing longstanding inefficiencies and arrears, the
innovation, inclusion, and private-sector-led government is rebuilding trust in the power sector and
development. The resolution of circular debt worth PKR
signaling reform seriousness to investors.
1.275 trillion, targeted mortgages, and
equity-promoting tax reforms have improved investor
confidence. The goal is to create a self-sustaining,
export-oriented economy that unlocks jobs, enhances The FBR has launched
productivity, and boosts GDP while reducing systemic
vulnerabilities. AI-powered audits, digitized
ICMA: How does the government intend to broaden invoicing, faceless customs,
the tax base and ensure equitable taxation?
Khurram Schehzad: Tax base expansion is being and automated production
achieved through digital enforcement, not higher rates.
The FBR has launched AI-powered audits, digitized tracking—identifying over
invoicing, faceless customs, and automated production
tracking—identifying over 390,000 non-filers with at 390,000 non-filers with at
least PKR 280+ billion in potential. Simplified tax returns least PKR 280+ billion in
(only a handful of fields for self-filing, compared to 800+
fields earlier) and harmonized return filing aim to potential
enhance voluntary compliance. The government is
reducing distortions, eliminating exemptions, and

6 ICMA’s Chartered Management Accountant, May-June 2025