- PM Shehbaz Sharif spearheads major recovery operation: source.
- Premier personally allocates funds for FBR’s legal representation.
- FBR chief and SBP governor contribute to key shift in govt strategy.
ISLAMABAD: The Federal Board of Revenue (FBR) recovered Rs23 billion from 16 major banks in a single day on February 21, 2025, following a Sindh High Court (SHC) ruling upholding a windfall tax.
An informed source said that spearheaded by Prime Minister Shehbaz Sharif, this major recovery operation was the result of teamwork in which the State Bank of Pakistan (SBP) governor played an active role.
The attorney general of Pakistan, the FBR chairman and a dedicated legal team contributed to a decisive shift in the government’s strategy to tax the elite and dismantle the entrenched culture of legal manipulation that has long protected powerful corporate interests, the source said.
The source informed that the staggering sum was recovered on February 21, 2025, just a day after the Sindh High Court’s Constitutional Bench ruled in favour of the government by dismissing financial sector petitions against the windfall tax imposed under Section 99D of the Income Tax Ordinance, 2001.
“For decades, Pakistan’s wealthiest individuals and institutions have used their financial muscle to delay or avoid taxation through constitutional petitions, leaving the government with no option but to shift the burden onto the poor and middle class. This time, however, the tide has turned,” the source said while insisting that the 26th Amendment to the Constitution, which led to the formation of Constitutional Benches in the Supreme Court and all high courts, served as the turning point in expediting crucial tax cases.
“Previously, elite taxpayers successfully stalled cases for years — sometimes decades — by exploiting legal loopholes,” he said, adding: “With the new judicial structure in place, courts are now fast-tracking cases, ensuring the immediate realisation of stuck revenue”.
Historically, it is explained that whenever a tax was imposed on corporate giants or the ultra-wealthy, they hired Pakistan’s most expensive legal experts to challenge it in court.
In contrast, the FBR struggled with limited budgets, hiring overburdened and underpaid lawyers who were no match for high-powered corporate attorneys. This imbalance led to perpetual delays, forcing successive governments to increase indirect taxes, disproportionately affecting lower-income groups.
“Determined to break this cycle, the prime minister personally allocated funds to ensure FBR secures the best legal representation. Under his directives, the government is not just defending its tax measures — it is actively monitoring every major tax case to prevent unnecessary delays,” claimed the source.
It is explained that the windfall tax under Section 99D, introduced via the Finance Act 2023, allows the government to tax up to 50% of unexpected excessive profits made by certain sectors due to economic anomalies.
“Between 2021 and 2023, Pakistan’s economy witnessed extreme instability. The Pakistani rupee depreciated sharply from Rs168 per dollar in 2020 to Rs286 in 2023, leading to an artificial demand for foreign exchange. As a result, banks exploited the widening gap between interbank and open market rates, raking in billions in profits,” recalled the source.
Seeing this as an unfair financial windfall, the source added, the government introduced SRO 1588(I)/2023 on November 21, 2023, imposing a 40% tax on foreign exchange income earned by banks during the preceding two years.
It is said that windfall taxes are not a new concept and have been implemented in various countries including the US, UK, Italy, Romania, Greece, Spain, Poland, etc.
With the success of windfall tax enforcement, the source disclosed that the government is now shifting its focus to recovering long-stalled revenues from other elite-focused taxes, including Super Tax (Section 4B & 4C), tax on undistributed reserves, Capital Value Tax (CVT) on foreign assets, tax on deemed income from unutilised real estate and tax on inter-corporate dividends.
These measures, the source said, previously entangled in court cases, are being aggressively pursued under the prime minister’s directives. Additional legal resources are being deployed to ensure that elite tax dodgers can no longer manipulate the system.
The FBR’s success in securing Rs23 billion from banks within 24 hours of a court ruling is more than just a fiscal victory — it is a paradigm shift in Pakistan’s taxation framework, said the source, adding: “This is just the beginning. It is reiterated to ensure that taxation is fair and does not disproportionately burden the poor and middle class”.
“With unwavering political will, a revamped judicial approach, and aggressive legal oversight, Pakistan’s tax regime is finally turning the tide against elite capture. The message is clear: the days of tax avoidance and tax evasion through legal manipulation are over,” the source added.
Originally published in The News
