Pakistan’s fragile economy is under pressure as export tax exemptions and concessions cost the government nearly Rs44 billion in the last fiscal year.
The Federal Board of Revenue (FBR), in its Tax Expenditure Report 2025, revealed that multiple export-related schemes drained public revenue during 2023-24. The findings raise questions about the effectiveness of policies aimed at boosting exports through tax relief.
Major losses from exemptions
The biggest hit came from SRO.450(I)/2001, linked to Export Processing Zones, which caused a revenue loss of Rs23 billion. The Temporary Import scheme, under SRO.492(I)/2009, added another Rs17 billion.
Other programs, including the Export Oriented Unit under SRO.327(I)/2008, accounted for Rs2 billion in losses, while the Duty and Tax Remission for Exporters (DTRE) scheme cost Rs734 million. Smaller but notable impacts came from the Manufacturing Bond Scheme (Rs712 million) and several exemptions under Chapter 99 of the Pakistan Customs Tariff.
While the FBR argues that export tax exemptions lower costs for businesses and encourage global competitiveness, critics point out that export growth remains weak. They question whether the economic benefits justify such large revenue sacrifices.
Debt adds to fiscal strain
The report comes at a time when Pakistan’s debt burden is worsening. A study by the Economic Policy & Business Development Think Tank shows per-capita debt has jumped to Rs318,252, up from Rs90,047 in 2014.
The country’s total debt equals 70.2 percent of GDP, surpassing the legal ceiling of 60 percent under the Fiscal Responsibility Act. Analysts warn that high interest rates, repeated currency devaluations, and rising fiscal gaps are pushing Pakistan into a “debt trap.”
Experts argue that without meaningful reforms in export tax policy and broader fiscal management, Pakistan risks sliding deeper into crisis. Boosting exports sustainably while reducing revenue leakage is seen as critical for long-term stability.
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