I. Background

1. We also refer to the related Important TLQC 3353 of 18.11.25 in trail, blue, italic and double Line about High Tax Policies, etc lead to 1000s Industries Closure or Moved abroad & Action please

2. We also refer to several Other QCs including (a) TLQc3354 of 19.11.25 about Tax Records Manipulation & Administrative Negligence and FST Fraud – FTO detailed deliberation against FBR (b) TLQC3337 of 11.11.25 about One Pakistani with Rs 4.77 Trillion Brain Drain VS Rs 12.5 Trillion whole Pakistan Budget (c) TLQC3336 of 11.11.25 about Tax Policy Crisis: Revenue Obsession and Failure of Reform (d) TLQC3329 of 30.10.25 about Collection by FBR; while New Tax Policy Office is directly report to MoF (e) TLQC2884 of 30.8.24 about High Taxes, Bills & Corrupt System but Brain Drain not Advisable (f) TLQC2881of 27.8.24 about ST at Import Stage be abolished to reduce Corruption - SZ (g) EIQC268 of 11.11.23 about Corruption acceptance by PPP Representative on Media

II. Updated Commentary

A. General

1. Further KQU 3663 of 21.11.25, being an important matter, we would inform you about IMF highlights ad hoc tax policy changes and governance weaknesses in Pakistan (Attachment 3360.1) in the ensuing paragraph, with emphasis in bold & Underline, ours for quick reading.

2. The IMF has raised concerns over Pakistan’s fiscal and governance framework in its Technical Assistance Report, November 2025, noting that tax policy changes are frequently implemented in an ad hoc manner without prior notice.

3. Further KQU 3661 of 20.11.25, being an important matter, we would inform you about Technical Assistance Report - Governance and Corruption Diagnostic Assessment (Attachment 3360.1) consist of 186 pages with an Interesting Content on page 3 & 4. If your Goodself has a short time, then atleast have a look at the same. 

4. The Report identifies systemic weaknesses across taxation, revenue administration, public financial management, market regulation, and oversight institutions.

B. Key Findings of the IMF Report

1. Tax Policy – TLQC 3329 refers

The report states that Pakistan’s complex tax system creates vulnerabilities to governance failures and corruption. Frequent ad hoc changes in tax policy, aimed at addressing revenue shortfalls, undermine consistency. Tax preferences managed by non-tax authorities, such as Special Economic Zones (SEZs), remain opaque and poorly monitored.

2. Revenue Administration – TLQC 3354 refers

The FBR operates with high autonomy but lacks robust internal control and audit systems. Management of critical risks, including data handling through Pakistan Revenue Automation Limited (PRAL), requires significant strengthening to improve accountability and efficiency.

3. Public Financial Management (PFM) – TLQC 2881 & 2884 and EIQC 268 refer

Despite improvements, Pakistan continues to struggle with weak budget credibility, resulting in governance vulnerabilities. Issues include inadequate protection of project funding, weak Single Treasury Account systems, overlapping debt management structures, and fragmented public procurement, which increase corruption risks and undermine fiscal discipline.

4. Market Regulation

Regulatory bodies issue overlapping and unclear rules, with high compliance costs creating opportunities for favoritism and corrupt practices. Despite accountability mechanisms, systemic enforcement gaps persist.

5. Financial Sector Oversight & AML/CFT

While oversight is generally sound, concerns remain over regulatory independence and state asset risks. Anti-money laundering and counter-terrorism financing frameworks have improved, but challenges remain in prosecuting corruption-related laundering and verifying beneficial ownership.

6. Rule of Law & Anti-Corruption – TLQC 2881 & 2884 and EIQC 268 refer

Judicial inefficiencies, case backlogs, and fragmented court systems undermine enforcement of economic rights. Anti-corruption efforts are hindered by political influence, reliance on a single prosecuting institution, and limited proactive targeting of high-risk sectors.

7. Reforms – Several QCs in BG & Earlier relevant QCs refer

The IMF report underscores that systemic reforms across taxation, public finance, market regulation, financial oversight, and judicial governance are critical for enhancing Pakistan’s fiscal transparency, accountability, and investment climate.

III. Further Details & Services

Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal   & Provincial Sales Tax or Withholding Tax Statement, Advisory, Return Filing or Review services, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com, asif.s.kasbati@professional-excellence.com.