ISLAMABAD: The government on Saturday said revenue collection from import duties and taxes had risen by 25 percent this year despite tariff reductions, as Prime Minister Shehbaz Sharif chaired a weekly review meeting on tax reforms and directed officials to accelerate modernization of the country’s revenue system.

The Federal Board of Revenue (FBR), Pakistan’s chief tax authority, has been at the center of the government’s reform drive, which includes automation, digital monitoring and the use of artificial intelligence to curb leakages and meet ambitious tax targets.

Officials told the meeting that tariff reforms carried out this year had been supported by improvements in customs processes, while duty-free imports of raw materials and intermediate goods had increased sharply under measures aimed at boosting manufacturing and exports.

“Tariff reforms this year have had no negative impact on revenue collection,” officials said during the briefing, according to a statement released by the Prime Minister’s Office. “Instead, duties and taxes at the import stage have increased by 25 percent.”

“This rise has come despite only a 3.6 percent increase in the volume of dutiable goods, disproving the concern that lower tariffs would reduce revenue,” they added.

The briefing maintained that duty-free imports jumped 41.5 percent, driven mainly by raw materials and intermediate items, a trend described as “a sign of improved productivity at the industrial level.”

The prime minister said the latest economic indicators had validated the government’s reform agenda and reflected “steadily improving” economic activity.

“Our tariff reforms and efforts to modernize and make the FBR transparent are producing concrete results,” he continued.

Officials also told the meeting that the purpose of tariff rationalization and tax system improvements was to lower manufacturing costs, strengthen exports and create a more competitive investment environment.

Sharif also instructed authorities to intensify efforts against tax evasion and plug gaps in major sectors such as tobacco, tiles and other high-revenue industries.

“Effective administrative and institutional steps must be taken to eliminate weaknesses in the tax collection system,” he said.

Last month, the FBR also reported a “significant increase” in income tax return filings, saying 5.9 million returns had been submitted by the end of October, up from five million in the same period last year, a 17.6 percent rise.

Of these, 3.6 million taxpayers filed returns with tax payments, an 18.6 percent increase over 2024.