ISLAMABAD: Pakistan’s tax-to-GDP ratio rose by 1.5 percentage points in fiscal year 2024–25 to reach 10.6%, officials said on Wednesday, marking progress toward the government’s 13% target under a three-year International Monetary Fund (IMF) reform program.

The increase comes as part of fiscal commitments under a 37-month Extended Fund Facility (EFF) with the IMF approved last year. During a review meeting in Islamabad, Prime Minister Shehbaz Sharif called for tighter oversight and accelerated digital reforms to expand the country’s tax base and bring more of the informal economy into the net.

The tax-to-GDP ratio had stood at 9.1% the previous year, and rose to 10.6% by the end of June 2025, according to a briefing at the meeting chaired by the prime minister.

The government aims to continue raising the ratio under a wider economic and structural reform agenda backed by the IMF, which includes digitization of the Federal Board of Revenue (FBR), to improve enforcement and increase compliance.

“Digitization at the FBR has helped meet targets, but steps must now be taken to ensure the system becomes sustainable,” the prime minister was quoted as saying in a statement released by his office. “Enforcement must be strengthened further to curb the informal economy.”

The meeting was told that total tax revenue collected in FY2024–25 crossed Rs20.4 trillion ($71.4 billion), while the number of income tax return filers jumped from 4.5 million in 2024 to over 7.2 million by June 2025.

Officials credited the increase to enhanced enforcement, including reforms in the retail sector, integration of point-of-sale systems, and an expanded digital footprint.

They said tax revenue from the retail sector alone rose by Rs455 billion ($1.6 billion) compared to the previous year.

The prime minister instructed FBR to fast-track the restructuring of its digital wing, set deadlines for implementation, and consult all stakeholders, including taxpayers and the business community, to ensure the reform process remains inclusive.

He also praised FBR officials and directed them to present actionable targets for the next phase of reforms within a week.