I.   BACKGROUND (BG)

A.   This refers to the related Important QCs in trail, blue, italic and double line (a) 3235 of 10.8.25 about PRAL closure in 6 months, Hacking & KC Recommendations (b) DNVC dated 24.8.21 KTBA urges FBR to secure data centre from hacking - TNS 

B.   We also refer to several Other matters including (a) FRQC274 of 9.8.25 about Cyber Attack disrupted Pakistan Petroleum’s IT Systems for ransom & KC Recommendation (b) COQC648 of 29.5.25 about SECP Cyber Security Advisory & KCR (c) FRQC214 of 22.4.24 about Pak Suzuki Data Leakage and KCR (d) FRQC195 of 24.2.24 about Cyber Threats surge by 17% in 2023; Be careful

II.   Updated Commentary

A.   General

Further to KQU 3515 of 16.8.25, being an important matter, we would inform you about PM Mr Shehbaz orders Pakistan Revenue Automation to be Limited Shutdown by December 2025 (Attachment 3246.1) in the ensuing paragraph, with emphasis in bold & Underline for quick reading.

2.   Prime Minister Mr Shehbaz Sharif has ordered the PRAL shutdown within six months, a move that could disrupt the country’s entire tax infrastructure. PRAL, which manages the nation’s tax filings and stores transaction data, plays a critical role in FBR operations.

3.   Officials said the Prime Minister gave the instructions last month. He directed that PRAL be dissolved and replaced with a modern, tech-driven organisation. The FBR owns PRAL, a private limited company established over three decades ago.

4.   Taxpayers currently use PRAL to file returns and make payments. However, outdated hardware and software have made the system unreliable. In 2019, the government took a foreign loan to upgrade the system, but failed to meet deadlines.

5.   A $400 million World Bank loan followed, with $80 million reserved for tech upgrades. But overlapping roles between the FBR’s IT and Reforms wings caused delays. Neither wing had full control, which stalled progress.

B.   Concerns Mount Over PRAL Shutdown Timeline

1.    PM now wants a new organisation staffed by top professionals. He asked for full financial and operational independence. The goal is to create a world-class system that supports FBR and taxpayers alike.

2.   Despite the vision, the timeline is tight. Officials doubt the government can build a new organisation by December without disrupting services. PRAL has lacked a chief information security officer for years, which raises more concerns.

3.   Earlier, PM had appointed a new board to reform PRAL. But even the board failed to deliver results. The PRAL shutdown decision came during a meeting attended by board members.

4.   PM Shehbaz had also asked for PRAL’s new data centres to launch by August 14. But servers remain unfinished, and officials fear the centres won’t be ready for inauguration.

5.   The FBR currently runs three data centres in Islamabad and Karachi. Their last upgrade came in 2010. With aging systems and growing data volumes, new facilities are urgently needed. The planned centres aim to boost performance without slowing response times.

C.   Policy Reversals Impact Enforcement

1.    During a recent FBR meeting, officials admitted that softening tax enforcement to appease traders hurt revenue.

2.   The FBR had planned to ban car, property, and stock purchases by non-filers. It also intended to disallow cash-based business expenses. But officials have now walked back those decisions.

3.   A revised statement says cash deposits in sellers’ bank accounts will now qualify as banking transactions. This marks a clear reversal in policy and weakens the enforcement plan shared with the IMF.

4.   As the PRAL shutdown deadline nears, the government must act fast to avoid service disruptions and keep tax reforms on track.

III. KC Recommendations: 

Due to hacking issue as per BG of TLQC 3238 of 16.8.25 in trail & PRAL closer, to be on a safer side, we recommend to download all your Entity & Your records from PRAL/IRIS including but not limited  to the following and keep in year-wise folders:

(a) Tax Return Income & Withholding Tax Statements (of Other taxes withheld)

(b) Federal Tax Return (including Others Tax withheld)

(c) FED Tax Return (including Others Tax withheld)

(d) Islamabad Capital Territory Tax

(e) MIS Reports as your Entity withholding Tax

(f) Department Notices, Adjustment request & allowed, your Entity & your Replies (including Attachments) & Department Orders

(g) Appeals filed to CIT Appeal, Hearing Notice, CIT Appeals Orders

(h) Relevant 4 Provincial Sales Tax information

IV.   Further Details & Services

Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal & Provincial Sales Tax or Withholding Tax Statement, Advisory, Return Filing or Review services, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com, asif.s.kasbati@professional-excellence.com.

Best regards for Here & Hereafter

Asif S Kasbati (FCA, FCMA & LLB)

Managing Partner 

Kasbati & Co (1400+ Tax, Levies, Companies, Economy, Inflation, HR, Banking, Finance, etc

Quick Commentary Service Provider and High Level 440+ Tax & Levies Laws Consultants)

Head of Tax & Professional Excellence Services (Symbols of High Quality Practical Tax, Levies & Corporate Training for Beginners to High Levels' Professionals)

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