FBR Steps Up Super Tax Recovery Nationwide

The Federal Board of Revenue (FBR) has accelerated enforcement and recovery of super tax following the Federal Constitutional Court’s judgment, with field formations issuing recovery notices to large corporate taxpayers and total collections projected at approximately Rs327 billion.

According to senior tax officials, recovery notices exceeding Rs200 billion were issued on Thursday as Large Taxpayers’ Offices, Medium Taxpayers’ Offices, and Corporate Tax Offices commenced computation of super tax liabilities for entities falling within their respective jurisdictions. As a consequence of the court’s ruling, thousands of taxpayers are now expected to come within the ambit of the levy.

In a number of cases, recovery notices were served during the day, while assessment and computation processes remained ongoing in others. Certain demands were raised under section 138(1) of the Income Tax Ordinance, 2001 in respect of tax year 2023.

Aggregate recovery under the super tax head is expected to reach Rs327 billion. Of this amount, approximately Rs90 billion is anticipated from oil and gas exploration companies, which are already subject to effective tax rates ranging between 44% and 55%. Officials clarified that the applicable legal framework does not permit taxation beyond the contractually agreed and statutory limits governing these entities.

The FBR has initiated direct engagement with major corporate taxpayers and intends to recover nearly Rs100 billion in the coming months as part of the first phase of enforcement. The International Monetary Fund has also been apprised of the court’s ruling and the measures being undertaken for its implementation.

Recovery notices issued by field formations warned that failure to discharge outstanding liabilities could result in coercive recovery actions, including attachment and sale of movable and immovable assets, appointment of receivers, and arrest and detention for a period of up to six months, as provided under the Income Tax Ordinance.

The notices further stated that non-payment would be justified only where the demand has been annulled through appellate proceedings, is subject to a pending rectification application, or has already been paid or adjusted against refunds. Taxpayers not falling within these exceptions have been directed to clear dues by the stipulated deadline, failing which recovery proceedings may be initiated under section 140 of the Ordinance.

Earlier, the Federal Constitutional Court upheld the constitutional validity of sections 4B and 4C of the Income Tax Ordinance, dismissing taxpayers’ appeals and holding that section 4B constitutes a valid tax under the Constitution, while section 4C was lawfully enacted and applicable to the relevant tax years.