The Federal Board of Revenue (FBR) in Pakistan has decided to exclude significant revenue losses stemming from bilateral and multilateral diplomatic agreements from its official cost of tax expenditure calculations.
The move, reported by Brecorder, redefines the scope of the agency's fiscal transparency reporting by treating these diplomatic concessions as outside the standard tax expenditure framework.
This accounting adjustment means that the financial impact of tax waivers granted to foreign entities or governments under diplomatic treaties will no longer appear in the FBR's primary metrics for tax revenue foregone.
For investors and analysts tracking Pakistan's fiscal consolidation efforts, this creates a divergence between reported tax expenditure and the actual revenue collected, potentially masking the scale of concessions made to secure international partnerships.
The development follows recent legislative changes under the Finance Act 2026, which already curtailed the FBR's operational powers by removing its ability to freeze bank accounts without prior notice.
That move was widely seen as a check on the revenue authority's enforcement capabilities.