Govt cuts export tax deduction to 1.25%, rolls out faceless FBR model

September 06, 2026 (MLN): The government has reduced the tax deduction on export proceeds to 1.25% from 2% while moving ahead with a centralized, faceless tax audit and assessment system aimed at reducing direct interaction between taxpayers and FBR officials.

Minister of State for Finance and Revenue Bilal Azhar Kiyani announced the measures while addressing the business community at the Lahore Chamber of Commerce and Industry (LCCI).

Under the revised tax structure, exporters will face a lower deduction on export proceeds, while the government has also abolished super tax for exporters and businesses with annual income between Rs150 million and Rs500 million.

For companies earning more than Rs500 million, the super tax rate has been reduced to 8% from 10%.

The government is simultaneously introducing a new Tax Operating Model under which audit and assessment processes will be centralized and conducted through a faceless, CRM-driven system.

According to Kiyani, audit and assessment orders will be generated using taxpayers’ returns, third-party information and predefined parameters, reducing individual discretion and the potential for harassment or collusion.

Customs operations are also being shifted toward a faceless system to reduce direct interaction between appraisers and importers.

The government has established dedicated FBR facilitation structures in major export hubs including Karachi, Faisalabad, Lahore and Sialkot, with Multan and Hyderabad also being brought into the system.

For small traders, the government has introduced a simplified and optional tax scheme. Participating shopkeepers will generally not face routine audits based solely on discrepancies relating to previous years, although audits may still be triggered by unusual discrepancies identified through FBR systems or third-party information.

The minister said traders enrolled in the scheme would not be required to act as withholding agents or install POS machines.

The government expects the measures to broaden the tax base, improve compliance and shift the FBR toward a more technology-driven and facilitation-oriented model.

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