ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial said Monday that blanket tax exemptions for non-profit organisations (NGOs) operating in Pakistan has been ended, replacing them with a system of 100 per cent tax credit subject to documentation and monitoring.
He informed the National Assembly’s Standing Committee on Finance, chaired by Syed Naveed Qamar, that NGOs will now be required to submit verifiable documents to claim tax benefits.
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NGOs have been granted tax benefits under Section 100C of the Income Tax Ordinance, (ITO) 2001 by the chief commissioner of the Regional Tax Office (RTO) or Large Taxpayers Office (LTO) concerned.
According to Section 100C, a Not for Profit Company (NPO) registered with the Securities and Exchange Commission of Pakistan (SECP) under section 42 of the Companies Act, 2017 shall be allowed a tax credit equal to 100 per cent of tax payable under any of the provisions of this Ordinance including minimum and final taxes.
Revoking this exemption, the FBR chairman said: “NGOs are now under the FBR’s radar. Without documentation, tax credits will not be granted…a self-declaration system has been introduced for non-profits.”
He explained that the decision aligns with global economic standards, where unchecked tax exemptions are seen as detrimental to economic health. The move is also part of Pakistan’s commitments to the International Monetary Fund (IMF).
Langrial said existing tax holidays for Special Economic Zones (SEZs) will end by 2035 and no new SEZs will receive such benefits. “The IMF wanted all exemptions ended by 2027, but we negotiated an extension to 2035. If this policy is reversed, we might be forced back to the 2027 deadline,” he warned.
He also revealed that a new reward system has been introduced, with 60 per cent weightage given to tax integrity. “Each sector will be evaluated differently, as tax avoidance strategies vary widely.”
Langrial further noted that while FBR is often blamed for corruption, much of the problem lies in the private sector. “In a country of 240 million, only 1.2 million people have declared assets above Rs10 billion in their tax filings,” he added.