What happened on 21 Dec 2025?

This briefing synthesizes critical developments across Pakistan's economic, regulatory, and corporate landscapes as of December 22, 2025. The day is marked by a bullish equity market, significant regulatory clarifications from the Federal Board of Revenue (FBR) for the upcoming tax year, and major strategic initiatives by leading corporations.

Key takeaways include the Pakistan Stock Exchange reaching all-time highs, driven by an unexpected policy rate cut by the State Bank of Pakistan (SBP) and improving foreign exchange reserves. Concurrently, the FBR has detailed stringent enforcement and recovery mechanisms for Tax Year 2026, outlining the personal liability of liquidators, the process for third-party fund recovery, and severe penalties for defaulters, including property seizure and arrest.

Sectoral performance shows a stark contrast, with the automotive industry demonstrating a robust recovery evidenced by a 92% year-on-year increase in tax collection for November 2025, while tax revenue from electricity consumption in Karachi has declined by 30% in the first five months of FY26.

In the corporate sphere, major developments include Engro's landmark $475 million Islamic financing deal to expand its telecom tower portfolio, Master Changan Motors' ambitious plan to launch 11 new vehicle models under a multi-brand strategy, and PepsiCo's social initiative to support flood-affected vendors. Regulatory bodies like the SBP and the Pakistan Telecommunication Authority (PTA) have also issued revised guidelines and warnings to enforce compliance within their respective sectors.

I. Macroeconomic and Market Performance

A. Equity Market Surges on Monetary Easing and Improved External Indicators

Pakistan's equity market demonstrated significant strength, extending its upward trend with the benchmark KSE-100 Index closing at 171,404 points, a week-on-week gain of 0.91% (1,539 points). The market reached an all-time intraday high near 171,960 points during the week.

• Key Drivers:
  • SBP Policy Rate Cut: The State Bank of Pakistan (SBP) unexpectedly cut the policy rate by 50 basis points to 10.5%, citing contained inflation dynamics within the 5–7% target range.
  • External Account Improvement: Pakistan recorded a current account surplus of $100 million in November 2025, a reversal from the deficit in October.
  • Strengthened Forex Reserves: Total liquid foreign exchange reserves rose by 1.477 billion to **21.089 billion**. Reserves held by the SBP increased by 1.3 billion to **15.886 billion**, following inflows from the IMF's Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF).
• Market Activity:
  • Average daily ready-market volumes declined by 5–6%, indicating a moderation in retail activity.
  • The futures spread narrowed sharply by 240 basis points to 14.15%, suggesting healthier market structure and reduced leverage-driven speculation.
  • The value of futures trading increased by 4.9% to Rs 12.40 billion, showing continued institutional interest in index-heavy stocks.
• Fiscal and Economic Data:
  • Large-Scale Manufacturing (LSM) growth exceeded 8% year-on-year in October, bringing cumulative growth for the first four months of FY26 to approximately 5%.
  • Foreign Direct Investment (FDI) declined 25% year-on-year to $927 million in the first five months of FY26.
  • The government raised Rs 445 billion through Pakistan Investment Bonds, with yields declining by 25 to 75 basis points.

B. Currency and Commodity Markets

• Pakistani Rupee (PKR): The rupee is expected to remain stable against the US dollar, ending the week at 280.25 per dollar in the interbank market. Stability is supported by steady dollar inflows from exporters and improving foreign exchange reserves. The Real Effective Exchange Rate (REER) has risen to 104.8, signaling a gradual erosion of export competitiveness.
• US Natural Gas: Futures eased to a seven-week low, with the front-month contract falling to $3.879 per million British thermal units (mmBtu) due to forecasts for milder weather and lower demand.

Market Rates as of December 22, 2025

Open Market Forex Rates

Currency	Buying	Selling
US Dollar	281	283.1
UK Pound Sterling	376	379.5
Euro	329.5	332.5
Saudi Riyal	74.85	75.35
U.A.E Dirham	76.35	77.35

Inter Bank Rates

Currency	Bank Buying TT Clean	Bank Selling TT & OD
US Dollar	280.15	280.65
UK Pound Sterling	374.74	375.41
Euro	328.32	328.91

Gold and Precious Metals (per Tola, 24K)

Metal	PKR
Gold	455,500
Palladium	180,100
Platinum	208,287
Silver	7,050

II. Federal Board of Revenue (FBR) and Tax Policy

The FBR has outlined a clear and stringent approach to tax compliance and recovery for Tax Year 2026, detailed across multiple sections of the Income Tax Ordinance, 2001.

A. Enforcement and Recovery Mechanisms for Tax Year 2026

• Tax Defaulter Penalties (Section 138): The FBR possesses extensive powers to recover unpaid taxes, which can be triggered after a taxpayer fails to pay upon receiving a formal notice. Methods include:
  • Attachment and Sale of Property: Both movable and immovable assets can be auctioned.
  • Appointment of a Receiver: A receiver can be appointed to manage a defaulter's property to settle tax liabilities.
  • Arrest and Detention: Taxpayers can be arrested and detained for up to six months in cases of persistent default.
• Third-Party Recovery (Section 140): The FBR is authorized to issue written notices to any person or entity (including individuals, companies, courts) that holds or owes money to a tax defaulter, requiring them to pay the amount directly to the FBR. The Commissioner's receipt provides a valid discharge of the third party's liability to the taxpayer. Immediate recovery is permitted in high-value cases (over Rs. 200 million) decided in the FBR's favor at three appellate forums.
• Liquidator Responsibilities (Section 141): This section imposes strict duties on liquidators, receivers, trustees for bankrupt persons, and mortgagees in possession. Key obligations include:
  • Notification: Notifying the Commissioner Inland Revenue in writing within 14 days of appointment or taking possession of an asset.
  • Asset Disposal Restriction: Liquidators cannot sell or transfer assets until notified by the Commissioner of the tax amount to be set aside.
  • Personal Liability: Failure to set aside the required tax amount makes the liquidator personally liable for that tax, up to the value of the assets.
• Payment Deadlines (Section 137):
  • Tax payable with an income return is due on the same date as the filing deadline.
  • Tax determined by an assessment order is due within 30 days of the demand notice being served.
  • Extensions or payment in installments may be granted, but default surcharge under Section 205 will still apply from the original due date.

B. Sector-Specific Tax Collection Trends

• Automotive Sector: The FBR recorded a 92% increase in tax collection from new car manufacturing in November 2025, reaching Rs 550 million compared to Rs 290 million in November 2024. This reflects a strong industry recovery, with car sales growing 52% to 15,442 units in the same month. For the first five months of FY26, tax collection from the sector grew by 76% to Rs 2.45 billion.
• Electricity Consumption: Advance income tax collection from electricity bills in Karachi saw a significant 30% decline during the first five months of FY26, falling to Rs 10.30 billion from Rs 14.70 billion in the previous year. Officials attribute this drop to slower industrial activity and a decrease in electricity tariffs.

C. Legal and Customs Developments

• Constitutional Court Ruling: In a case challenging Section 109-A of the Income Tax Ordinance, 2001, the Federal Constitutional Court (FCC) set aside an order from the Sindh High Court's Constitutional Bench. The FCC ruled that the SHC's bench lacked jurisdiction to recall an interim stay granted by a regular bench prior to the 27th Constitutional Amendment.
• Anti-Smuggling Operation: Karachi Customs Enforcement confiscated 64,578 liters of smuggled Iranian diesel and petrol at the Northern Bypass. The total value of the seizure, including a Mazda vehicle, is estimated at Rs 36.5 million.

III. Corporate and Industry Highlights

A. Major Deals and Strategic Initiatives

• Engro: The conglomerate has executed a $475 million (Rs 133 billion) transaction, financed entirely through Islamic banking, to expand its telecom infrastructure business. This funding enabled the acquisition of Deodar and its portfolio of over 10,000 telecom towers, strengthening Pakistan's locally owned shared telecom infrastructure.
• Master Changan Motors: CEO Danial Malik unveiled a "multi-brand future" strategy aimed at offering "One for Everyone." The company plans to introduce 11 new models in Pakistan over the next two years across three distinct brands:
  • Changan: The mass-market brand will introduce three new models with ICE, HEV, and PHEV powertrain options.
  • Deepal: The premium-electric brand, which launched the S05 CKD REEV, will expand its lineup with the E07, Hunter K50, and two other models.
  • Avatr: The futuristic ultra-premium NEV brand will debut with three new models.
• PepsiCo Pakistan: In partnership with the PepsiCo Foundation and SeedOut, the company launched the "PepsiCo Rise Together" program. This two-year initiative aims to restore the livelihoods of over 200 flood-affected street-food vendors in its first year by providing modern food carts, interest-free microfinancing, and training in hygiene, financial literacy, and business planning.

B. Industry Collaborations and Policy Advocacy

• Academia-Industry Partnership: SPEL Limited, a manufacturer of automotive parts and packaging solutions, signed an MoU with the University of Engineering and Technology (UET), Lahore, to establish the Chair on Polymer Sustainability and Circularity. This initiative will focus on research in recycling, sustainable material design, and circular economy practices.
• Trade Body Engagements:
  • The Pakistan Coating Association and the Lahore Chamber of Commerce and Industry (LCCI) signed an MoU to promote mutual cooperation. The association is advocating for the coating industry to be recognized as a separate industrial sector.
  • A delegation from the Sarhad Chamber of Commerce and Industry (SCCI) met with the Chief Commissioner Inland Revenue in Peshawar to discuss operational issues such as refund delays, POS integration, and high corporate tax rates.
• Digital Outreach: The Ministry of Commerce, led by Minister Jam Kamal Khan, inaugurated the "Horticulture Horizons" podcast series. This is the ministry's first podcast, launched by the Pakistan Horticulture Development and Export Company (PHDEC) to share best practices and drive growth in the sector, with a goal of reaching $2 billion in horticulture exports within three years.

IV. Regulatory and Technology News

A. Regulatory Directives

• State Bank of Pakistan (SBP): The SBP has revised Para 12(ii)(b), Chapter 14 of the Foreign Exchange Manual. The update streamlines the remittance of Royalty, Franchise, and Technical Service (RFT) fees for entities in the agriculture, social, infrastructure, and service sectors, including international food chains. New operations can remit an upfront fee of up to $250,000 and a recurring fee of up to 8% of net local sales.
• Pakistan Telecommunication Authority (PTA): The PTA has issued a strong notice to all license holders, warning that any service or agreement found to be in violation of license terms or regulatory rules must be terminated immediately. The authority has stated that failure to comply could result in strict legal action.

B. Technology Product and Legal Updates

• New Product Launch: Apple iPhone 17 Pro Max: Apple has officially launched its new flagship smartphone in Pakistan. Pricing and key features are as follows:
  • Pricing:
    • 256GB: Rs. 565,000
    • 512GB: Rs. 648,500
    • 1TB: Rs. 732,000
    • 2TB: Rs. 898,500
  • Key Specifications:
    • Processor: Apple A19 Pro Bionic chip
    • Display: 6.9-inch LTPO Super Retina XDR OLED (120Hz)
    • RAM: 12GB
    • Rear Camera: 48 MP + 48 MP + 48 MP
    • Battery: 4832 mAh
• Product Leaks: OnePlus 15T: Leaks suggest the upcoming OnePlus 15T will be a "compact powerhouse" featuring a 6.3-inch 1.5K display, a Snapdragon 8 Elite Gen 5 chipset, and a large 7,000 mAh battery.
• International Tech Legal Case: South Korea's consumer agency announced it would order SK Telecom to compensate 58 victims of a recent hacking incident. Each applicant is to receive 100,000 won ($67) in combined cash points and mobile phone bill discounts. The cybersecurity breach led to a data leak affecting over 20 million users.