Laws & Taxes

Global oil prices jumped more than 3% after reports that Iran is considering restrictions on US and Israeli vessels in the Strait of Hormuz, raising fears of supply disruptions. Renewed geopolitical tensions in the Middle East have increased uncertainty over global energy markets and crude oil supplies.

The federal government has reduced petrol by Rs3.19 per litre and high-speed diesel (HSD) by Rs1.50 per litre for August 7. The revised fuel prices, notified by OGRA, provide temporary relief to consumers and will remain effective until the next price review.

The federal government will construct two new underpasses and establish four Emergency 1122 service centres in Islamabad to improve traffic flow, emergency response, and public infrastructure. The projects form part of the CDA's broader plan to modernize the capital and enhance urban development.

Starting September 6, the Punjab Environmental Protection Agency (EPA) will prohibit businesses from charging customers for plastic bags. This mandate aims to stop retailers from profiting off plastic, which has discouraged the use of eco-friendly alternatives. While plastic bags must now be provided for free, businesses are still permitted to charge for reusable or recyclable non-plastic options. Violators face fines up to Rs50,000, potential store closures, and legal action.

President Asif Ali Zardari has enacted the Finance Act 2026, launching a comprehensive suite of tax and tariff measures that took effect on July 1, 2026. The legislation aims to achieve a tax collection target of PKR 15,264 billion for the 2026-27 fiscal year by generating PKR 1.02 trillion through enhanced enforcement, digitalization, and new tax levies. While introducing higher taxes on luxury items and specific sectors, the Act also provides PKR 143.4 billion in import-stage tax relief through adjusted duties and removed exemptions. Key initiatives include the Retailer Formalisation Scheme, supply chain digitalization, and the use of algorithmic tax assessment to broaden the revenue base.

A survey by the Press Network of Pakistan (PNP) reveals that most Pakistanis support the government’s proposed 5% withholding tax on social media influencers, agreeing that creators should contribute to the national tax system. However, respondents emphasized the need for a balanced approach, strongly favoring income-based exemptions for small creators and the implementation of government incentives to support digital entrepreneurship. While there is concern that the tax could discourage young talent, the public generally views this measure part of the Finance Bill 2026—as a necessary step to bring the growing digital economy into the formal tax net.

In the 2026-27 budget, the government has introduced a 20% reduction in regulatory duty on high-end imported mobile phones, effective July 1, 2026, which will lower costs by Rs. 14,000 per device. However, the FBR Chairman advises against broader duty cuts, arguing that premium imports are purchased by affluent consumers and that current tax structures are vital for revenue, with flagship phones contributing 58% of import tax revenue despite making up only 16% of units. Instead, the FBR is prioritizing support for the local assembly industry which serves 95% of the market and recommends that future tax relief be strictly limited to entry-level phones in the $31–$200 range to assist price-sensitive buyers.

The Islamabad High Court has issued an interim order suspending property tax collection by the Metropolitan Corporation Islamabad (MCI). This ruling follows a petition challenging the legal validity of Gazette Notification No. 404(1)-4/2024 and specific tax bills issued in April 2026. The petitioners argue that the MCI lacks the authority to levy this tax, noting that the notification was issued by an administrator rather than an elected body, in potential violation of the Islamabad Capital Territory Local Government Act of 2015 and the Urban Immovable Property Tax Act of 1958. The court found a prima facie case for relief and has stayed the collection of these tax bills for all affected property owners until the next hearing in four weeks.

The Federal Board of Revenue (FBR) has uncovered significant tax underreporting among high-net-worth individuals and property buyers during its review of the Finance Bill 2026. Financial data analysis revealed that approximately 8,697 individuals held collective bank deposits of PKR 750 billion while reporting zero taxable income. Furthermore, nearly 80 percent of top property buyers materially underreported their bank deposits in tax filings, and 98.9 percent of high-deposit individuals failed to accurately report their financial inflows. In response, the FBR is working to strengthen data integration with the State Bank of Pakistan (SBP) to improve transaction monitoring and expand the tax base. Meanwhile, the Senate Standing Committee on Finance and Revenue has criticized past tax system "experiments," and the FBR has agreed to a proposed audit of policy actions taken over the last decade to help identify patterns of elite capture within the system.