Pakistan tax expenditure below global average at 2.07% of GDP

June 12, 2026 (MLN): The latest expenditure report reveals that developed nations typically allocate a much larger percentage of their Gross Domestic Product (GDP) towards tax relief and incentives compared to developing countries.

According to the Global Tax Expenditure Database, the average global tax expenditure spanning from 2010 to 2025 ranged between 3.7% and 4.9% of GDP, with the average across 33 reporting countries currently sitting at 4.9%.

The average across the Organization for Economic Co-operation and Development (OECD) countries has similarly stabilized at approximately 4.9%, according to Finance Bill.

Despite intense domestic scrutiny over the sheer volume of tax breaks in Pakistan, the country's tax expenditures are actually noticeably lower than these international standards.

For the Fiscal Year 2024-25, Pakistan’s total tax expenditure is estimated at just 2.07% of its GDP.

This low percentage reflects both the structural design of Pakistan's specific tax system and the FBR's refined benchmark methodology that tightly restricts what is officially classified as a policy-driven tax expenditure.

When compared specifically against a peer group of ten comparable developing economies ranging from Türkiye to Romania Pakistan aligns very closely with developing market norms.

 The cumulative average tax expenditure for this 15-year peer sample stands at 2.31% of GDP. Pakistan's 2.07% estimate sits comfortably within the lower end of this peer group, indicating that the country's level of revenue foregone is proportionately standard for a developing economy of its size.

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