What happened on 01 Jan 2026?

Executive Summary

This briefing synthesizes key economic, financial, and industrial developments at the start of January 2026. In Pakistan, the new year began with a robust performance on the Pakistan Stock Exchange (PSX), which surged to a new all-time high, reflecting strong investor optimism. Concurrently, the Federal Board of Revenue (FBR) is intensifying efforts to meet revised tax targets for FY2025-26 after experiencing a significant shortfall in the first half, considering new excise duties and continuing desk audits for exporters. The Sindh Revenue Board, however, reported strong 21% growth in tax collection.

The corporate sector saw significant activity, including a Rs 15 billion capital injection into U Bank by PTCL Group, the successful IPO and listing of Pak-Qatar Family Takaful Limited, and the launch of the Lucky Islamic Energy Fund. Key strategic industrial initiatives are underway, notably the plan to establish Pakistan's first semiconductor chip manufacturing unit in Faisalabad and a major overhaul of the insurance sector's regulatory framework. However, a report warns of potential forced exits and disorderly consolidation within the fragmented oil marketing sector.

Globally, markets started 2026 on a positive note, though with caution, as investors assess the sustainability of the AI-led rally and future Federal Reserve policy. Precious metals extended their stellar 2025 rally, with gold having its best year in nearly five decades. Oil prices are edging higher, influenced by geopolitical tensions, after recording their largest annual loss since 2020. In the automotive sector, China's BYD set a global record with 2.26 million EV sales in 2025, positioning it to surpass Tesla.

I. Pakistan Economic Landscape: Taxation and Revenue

FBR's Strategy to Meet FY2025-26 Tax Targets

The Federal Board of Revenue (FBR) is implementing a multi-pronged strategy to achieve its tax collection targets for the second half of fiscal year 2025-26 (January–June) following a revenue shortfall in the first six months.

• Financial Performance (1HFY26):
  • Collection: FBR collected Rs 6,169 billion during July–December 2025-26.
  • Target: The target for the same period was Rs 6,490 billion.
  • Shortfall: The resulting shortfall stands at Rs 321 billion. The provisional collection for December 2025 was Rs 1,425 billion against a target of Rs 1,446 billion, a monthly shortfall of Rs 21 billion.
  • Revised Annual Target: The overall tax target for FY2025-26 has been revised downward from Rs 14,307 billion to Rs 13,979 billion.
• Strategic Measures:
  • In a high-level meeting on January 1, 2026, FBR Chairman Rashid Mahmood Langrial outlined strategies focusing on court case recoveries, enforcement actions, and administrative measures.
  • Field formations were commended for their efforts in collecting stuck-up revenue.
  • The contributions of the newly appointed FBR Member Inland Revenue (Operations), Zubair Bilal, were noted for helping to minimize the tax collection gap.
• Proposed Additional Revenue Measures:
  • Increasing excise duties on fertilizers and pesticides by 5%.
  • Introducing an excise duty on high-value sugary products.
  • Broadening the sales tax base by moving certain items to the standard rate.

Sindh Revenue Board (SRB) Performance

The Sindh Revenue Board (SRB) demonstrated strong revenue growth in the first half of FY2025-26.

• 1HFY26 Collection: The SRB collected Rs 161.43 billion in sales tax on services, a 21% increase compared to the Rs 133.27 billion collected in the same period last year.
• December 2025 Performance: The authority collected Rs 34 billion in December 2025, marking a 25% year-on-year increase from Rs 27.15 billion in December 2024.
• Future Focus: The SRB aims to maintain this growth momentum by tackling new challenges, including the collection of Agricultural Income Tax and implementing the Negative List Tariff regime.

Tax Law Compliance and Penalties

A detailed breakdown of punishable offenses under the Income Tax Ordinance, 2001 (updated for 2026) highlights the legal consequences of non-compliance.

• Punishable Offences (Section 191): Failure to comply with various obligations without a reasonable excuse can result in a fine, imprisonment of up to one year, or both.

Obligation	Description
Return Notices	Failing to comply with notices under sections 114, 116, 117.
Advance Tax	Failure to pay advance tax under Section 147.
Tax Collection/Deduction	Not collecting/deducting tax and paying it to the Commissioner.
Furnish Particulars	Not furnishing accurate particulars under Section 165.
Notices Compliance	Failing to comply with notices under Sections 140 or 176.
Assistance to FBR	Not providing facilities or assistance under Section 175.
Bank Account Declaration	Not declaring business bank accounts in forms or returns.
Computerization	Failure to integrate a business with the FBR computerized system.
Tax Invoice	Not generating a tax invoice verifiable by the FBR system.

• Penalties for Late Filing:
  • The penalty for non-filing is the higher of 0.1% of tax payable per day or Rs. 1,000 per day, with the maximum penalty not exceeding 200% of the tax payable.
  • Reductions are available: 75% reduction if filed within one month, 50% within two months, and 25% within three months.
• Regaining Active Taxpayer Status: A taxpayer excluded from the Active Taxpayers’ List (ATL) for late filing can regain status by paying a surcharge: Rs. 20,000 for a company, Rs. 10,000 for an Association of Persons (AOP), and Rs. 1,000 for an individual. While excluded, a person cannot carry forward losses or receive refunds.

Desk Audits for Exporters

On January 2, 2026, the FBR confirmed the initiation of desk-based tax audits for exporters, clarifying it is a routine compliance measure. This follows the amendment in the Finance Act, 2024, which shifted the tax regime for exporters from a final tax regime to a minimum tax regime. The FBR stated the exercise is being supervised by its headquarters to ensure transparency and prevent undue hardship for taxpayers.

II. Pakistan Financial Markets and Corporate Developments

Pakistan Stock Exchange (PSX) Performance

The PSX began 2026 with a significant rally, achieving a new record high.

• KSE-100 Index: On January 1, 2026, the benchmark index gained 2,301.17 points (1.32%) to close at 176,355.49.
• Market Activity: Trading volume increased to 1,402.64 million shares, with the value of shares improving to Rs 48.42 billion. Market breadth was strongly positive, with 337 companies registering gains against 116 decliners.
• Volume Leader: K-Electric Ltd was the volume leader with 372.71 million shares traded.

Key Corporate Activities

• Pak-Qatar Family Takaful Limited (PQFTL) Lists on PSX: Following an IPO that was oversubscribed 3.2 times in the book-building portion and 3.8 times in the public subscription, PQFTL was listed on the PSX. The IPO raised PKR 901 million and attracted over 8,200 investors.
• PTCL Group Injects Rs 15 Billion into U Bank: Pakistan Telecommunication Company Limited (PTCL) approved a capital injection of Rs 15 billion (approx. USD 53 million) into its subsidiary, U Microfinance Bank (U Bank). The funds will support U Bank's growth and digital banking platform development. The first tranche of Rs 4 billion was received on December 31, 2025.
• Systems Limited Appoints Global Chief Growth Officer: The company appointed Saquib Ahmad to the new role to accelerate international growth and strategic expansion. Ahmad has over 27 years of experience, previously serving as Country Managing Director for SAP.
• OGDCL Receives Rs 8.3 Billion: The Oil and Gas Development Company (OGDCL) received Rs 8.3 billion from Uch Power (Private) Limited as part of the government's initiative to settle circular debt in the energy sector. This follows a previous receipt of Rs 41.8 billion.
• Global DEI Awards for 2025: 44 leading Pakistani companies participated in the awards. Bank Alfalah Limited, Jazz, HBL, and Engro Polymer & Chemicals Limited were named “Most Inclusive Companies of the Year.”

New Financial Products

• Lucky Islamic Energy Fund (LIEF) Launched: Lucky Investments Limited introduced LIEF, a Shariah-compliant, sector-focused equity fund. The fund will invest in listed energy companies (exploration, refining, power generation, renewables) and is benchmarked against the KMI-30 Index. Lucky Investments is currently managing AUMs of over PKR 130 billion.

III. Pakistan Trade and Industrial Sector Outlook

Insurance Sector Reform Initiative

The Ministry of Commerce (MoC) is undertaking a major overhaul of the insurance sector's legal framework.

• Objective: The reforms aim to increase competition, facilitate the entry of international insurers, strengthen regulation, and align the industry with global best practices, as endorsed by the Special Investment Facilitation Council (SIFC).
• Initial Setback: The MoC's proposal of approximately 220 amendments to the Insurance Ordinance, 2000 was rejected by the Cabinet Committee on the Disposal of Legislative Cases (CCLC).
• Path Forward: The CCLC directed the MoC to prepare a new draft bill that would repeal the existing ordinance, citing the high risk of drafting errors with numerous amendments and noting that the current ordinance was promulgated during a martial law period.

Establishment of First National Chip Manufacturing Unit

Chaudhary Shafay Hussain, Provincial Minister for Industries, Commerce & Investment, announced that Pakistan’s first semiconductor "chip" manufacturing unit will be established in Faisalabad. This development aims to support the mobile phone assembly plants already operating in Faisalabad, Karachi, and Lahore, making Faisalabad the third city in the region after locations in China and India with such facilities.

Oil Marketing Sector Faces Consolidation

A report by Dubai-based advisory firm Mountain Ventures warns that Pakistan's oil marketing company (OMC) sector is heading for "forced exits and disorderly consolidation."

• Structural Issues: The report highlights extreme market fragmentation, with 44 licensed OMCs, but 60% of sales volume concentrated among just three players.
• Economic Pressures: The "long tail" of smaller companies competes mainly on discounting, which erodes margins across the sector and weakens incentives for investment in infrastructure and compliance.
• Market Outlook: The sector's future will be shaped more by scale, balance-sheet resilience, and execution capability rather than demand growth. The entry of global brands like Aramco is expected to raise standards for service and site quality.

Promotional and Business Events

The fourth "My Brand Expo," organized by the Pakistan International Business Forum (PIBF), is scheduled to begin on January 3, 2026, at the Karachi Expo Centre. The two-day event will feature over 700 brands from 270 companies. Special pavilions will be dedicated to young and women entrepreneurs.

IV. Global Markets and Commodities Analysis

Global and Regional Equity Market Performance

• Asia-Pacific: Stocks started 2026 positively, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.66% and Hong Kong’s Hang Seng Index gaining 1.24%.
• India: Equity benchmarks had a subdued start to 2026. The Nifty 50 rose 0.06% to 26,146.55, while the BSE Sensex lost 0.04%. A rally in auto stocks was offset by a sharp decline in cigarette-makers like ITC (down 9.7%) and Godfrey Phillips (down 17.1%) after the government imposed a new excise duty. Persistent foreign fund outflows remain a concern.
• Saudi Arabia: The benchmark index gained 0.6% in the first session of the new year, led by broad-based buying.
• Canada: The S&P/TSX Composite index's nearly 29% surge in 2025 marked its strongest annual performance since 2009.

Commodity Market Trends

• Oil: Prices edged higher at the start of 2026 after both Brent and WTI benchmarks recorded their steepest annual losses since 2020, falling nearly 20% in 2025. Brent crude futures were at $60.99 a barrel, while U.S. WTI crude was at $57.57. Price movements are being influenced by Ukrainian drone attacks on Russian oil facilities and U.S. sanctions pressuring Venezuela's exports.
• Precious Metals: Gold and silver extended their "sparkling rally" from the previous year. Gold's rise in 2025 was its biggest in 46 years, driven by Fed rate cuts, geopolitical tensions, and central bank buying. Spot gold was up 0.9% to $4,351.70 an ounce.

US Treasury and Economic Indicators

U.S. Treasury yields moved higher after new jobless claims for the week ending December 27 came in lower than forecast (199,000 claims vs. 220,000 forecast). The 10-year Treasury note yield rose to 4.147%, while the two-year yield was at 3.471%. Both yields saw significant yearly drops in 2025, the first since 2020.

V. Technology and International Business Highlights

Automotive Sector: BYD's Record EV Sales

Chinese auto manufacturer BYD sold a record 2.26 million electric vehicles in 2025. This figure positions the company to outstrip Tesla in annual EV sales for the first time. The Shenzhen-based firm, which began as a battery manufacturer, now dominates China's new energy vehicle market and is expanding its presence overseas.

Consumer Technology: OnePlus 16 Rumors

Early leaks about the upcoming OnePlus 16 smartphone suggest major upgrades. Reports indicate the device may feature a powerful 200MP primary camera sensor. Newer rumors claim OnePlus is testing an ultra-high-refresh-rate display, potentially 200Hz or even 240Hz, which would make it one of the fastest smartphone displays available and target gamers and tech enthusiasts.