The FBR is the institution every company meets twice: once at registration, and again every year at filing. It administers four taxes, runs the customs system at every border, and holds the digital record that banks, regulators and courts treat as authoritative.
What the FBR is
The Federal Board of Revenue traces its origin to the Central Board of Revenue, created on 1 April 1924. The FBR Act of July 2007 renamed the board and placed it under the Revenue Division of the Ministry of Finance. It is headed by a chairman who is also the federal secretary of the Revenue Division.
It works through two operational arms. Inland Revenue administers income tax, sales tax and federal excise duty. Pakistan Customs administers the tariff, import and export controls, valuation and the clearance of goods. Both are delivered through Large Taxpayer Units and Regional Tax Offices across the country, supported by directorates for intelligence, audit, valuation and training.
Most interaction now happens online. Income tax and sales tax run through the IRIS portal. Customs declarations run through WeBOC and, increasingly, the Pakistan Single Window, which links customs with other border agencies.
What it decides
| Function | What the FBR does |
|---|---|
| Registration | Issues the National Tax Number and the sales tax registration number, and registers withholding agents |
| Income tax | Receives returns, assesses income, processes refunds and conducts audits |
| Sales tax | Registers businesses, administers input and output tax, and handles refunds |
| Federal excise | Administers excise duty on the goods and services listed in the schedule |
| Withholding | Sets withholding rates on salaries, contracts, imports, dividends, profit and payments abroad |
| Customs | Classifies goods, values imports, applies duties and exemptions, and clears shipments |
| Enforcement | Audits, investigations, recovery and appeals through the tribunals and courts |
The FBR also issues statutory regulatory orders and circulars that change rates and procedures between finance acts. For a foreign company, the two that matter most are the withholding rules on cross-border payments and the customs treatment of imported plant, machinery and inputs.
What it does not decide
- Company registration. The SECP incorporates the company. The FBR registers it for tax afterwards.
- Foreign exchange. The State Bank and the authorised dealer control accounts, capital and repatriation.
- Provincial sales tax on services. Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan each run their own revenue authority for services.
- Sector licences. A power, telecom, oil and gas or pharmaceutical business needs its sector regulator.
- Incentives. The FBR administers exemptions that the law provides. It does not create them.
Registering with the FBR
A foreign company usually needs three registrations, in this order.
- National Tax Number. Apply through IRIS with the SECP certificate, the memorandum and articles, the registered address, the directors and the bank details. The NTN is the company’s permanent tax identity.
- Sales tax registration. Required if the company supplies taxable goods or services. The application needs the business premises, the utility connection and the bank account.
- Withholding agent registration. Required if the company will pay salaries, rent, contracts, dividends or foreign suppliers. Withholding is collected at source, so the obligation starts with the first payment, not the first return.
Registration is not the end of the matter. A company must file a return even when it has no activity, and a nil return is not the same as no filing. Penalties and late fees accrue from the due date, and a company that stops filing cannot obtain a tax clearance certificate later.
Customs
Customs is the part of the FBR that most directly affects project cost. Three decisions drive the duty you pay.
- Classification. The eight-digit tariff heading determines the rate. A wrong code can mean an underpayment that is recovered later with penalties, or an overpayment that is never refunded.
- Valuation. Customs values imports using the transaction value where it is acceptable, and fallback methods where it is not. Related-party imports attract closer scrutiny.
- Exemptions. Statutory regulatory orders and the Finance Act create exemptions for specified plant, machinery, raw materials and sectors. An exemption has conditions, and the conditions are enforced at clearance.
Declarations are filed through WeBOC or the Pakistan Single Window by a licensed clearing agent. The importer remains legally responsible for the accuracy of the declaration, even when an agent files it.
Common mistakes
- Registering after the first sale. Sales tax registration is required before taxable supplies begin, not after the first invoice.
- Ignoring provincial sales tax. Services are taxed by the province where they are rendered, and each province has its own portal and return.
- Missing withholding on payments abroad. Payments for services, royalties, technical fees and dividends are subject to withholding and to the tax treaty, if one applies.
- Treating a nil return as optional. A company with no activity still files. The penalty for not filing is administrative and immediate.
- Assuming the clearing agent owns the risk. The importer is the declarant in law. Classification and valuation should be checked in-house or by an adviser.
Reviewed 25 October 2026