Doing honest, formal business in Pakistan has become untenable. The latest move of raising withholding tax on services from 9% to 15% means you are now paying 15% of gross revenue upfront to the government.
Not profit, revenue. This is how FBR meets its tax targets: by squeezing those already in the formal economy. Tax refunds as a consequence of these policies continue to mount and are never refunded. 10% of my capital is stuck in tax refunds for years.
Every year, formal businesses in Pakistan are battered down by excessive corporate and advance taxes. When you add it all up, the effective corporate tax burden exceeds 40% and that is before you even account for the cost of compliance and withholding distortions.
Pakistan is perhaps the only country where both exist simultaneously: exorbitant corporate taxes and an inequitable personal tax regime. This isn’t just poor policy, it is economic self-sabotage.
As long as such predatory taxation continues, don’t expect meaningful investment or GDP growth. The system is rigged against those trying to play fair.
Najam Ali (Karachi)
Copyright Business Recorder, 2025
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