ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday hinted at further tax relief for businesses, including possible complete withdrawal of super tax and reduction in sales tax rate, amid growing concerns over high input costs, elevated interest rates and alleged harassment by tax authorities, forcing several multinational companies to leave the country.
The development came during a meeting of the Sub-Committee of the Senate Standing Committee on Finance, where representatives of the business community raised serious concerns over the increasingly difficult operating environment and its impact on investment and industrial activity.
Mian Zahid Hussain, chairman, Policy Advisory Board (Federation of Pakistan Chambers of Commerce and Industry), and Tariq Khan Jadoon, Vice President, told the committee that high taxation, costly financing, rising input prices and what they termed harassment by FBR officials were discouraging both domestic and foreign investment. They warned that the continuation of such policies could push more companies to relocate their operations outside Pakistan, as currently industries are running at 40-45 percent capacity.
The Committee Convener Muhammad Talha Mahmood stated that the objective of the meeting was to explore mechanisms for promoting economic activity and creating a conducive environment for businesses.
He observed that many companies were either scaling down operations or leaving the country due to high energy costs and a burdensome tax regime. He expressed serious concern over the deteriorating business environment, noting that several multinational companies had already left Pakistan.
Hamid Ateeq Sarwar, Member FBR, informed the committee that tax reductions had already been introduced since 2025 and indicated that the government was prepared to provide further relief to taxpayers.
He said that super tax was among the areas under consideration for further reduction, while the government was also examining measures to reduce the sales tax burden on businesses.
The FBR official pointed out that the government had already provided tax relief of around Rs361 billion under the directions of the Prime Minister, adding that the process of rationalising the tax burden would continue.
Sarwar said that taxation measures had been influenced by the country’s import requirements and fiscal constraints. He highlighted recent relief measures introduced by the government, including tax reductions for salaried individuals, a decrease in super tax, and the elimination of super tax for exporters.
The officials further stated that the Government had absorbed a revenue impact of approximately Rs. 361 billion to facilitate businesses and stimulate economic activity. He also informed the Committee that exporters’ facilitation committees had been established in Karachi, Lahore, Sialkot, Faisalabad, Islamabad, and Multan to address tax concerns.
Zahid Hussain said that national policy appeared overly focused on revenue generation rather than economic growth. He emphasized the need to reduce advance and withholding taxes, rationalize customs duties, simplify audit procedures, and review factory surveillance mechanisms.
He maintained that cumbersome tax procedures and compliance requirements had discouraged industrial growth and increased the cost of doing business.
Jadoon noted that despite Pakistan’s competitive labour costs, businesses continued to face significant challenges due to high electricity tariffs and regulatory burdens. He stressed the need to broaden the tax base by bringing new sectors and businesses into the tax net rather than placing additional pressure on existing taxpayers.
The business community further complained about the conduct of FBR field formations, alleging that frequent notices, audits and enforcement actions had created uncertainty for taxpayers.
The committee stressed the need for a business-friendly tax regime, arguing that excessive taxation could ultimately undermine the government’s own revenue objectives by shrinking the formal tax base and discouraging investment.
Talha Mahmood questioned the effectiveness of existing measures aimed at attracting foreign investment and sought details regarding mechanisms for investor protection and share transfers. The Convener directed the relevant authorities to provide the Sub-Committee with a comprehensive briefing on the existing framework.
The Committee expressed serious concern over the absence of the Secretary Finance. Mahmood directed that the Secretary ensure attendance at the next meeting, warning that continued absence could result in the matter being referred to the Senate Privileges Committee.
The Convener reiterated that sustainable economic growth could only be achieved through business-friendly policies and transparent governance. He emphasized the need to appoint competent and honest officials capable of formulating policies that encourage investment, industrialization, and entrepreneurship.
FBR officials informed the Committee that the Board was undertaking reforms to improve taxpayer facilitation, including the development of a mobile application for tax reimbursements and the designation of specific facilitation days in major commercial centres across the country.
The Committee also discussed the ongoing goods transport strike and its adverse impact on trade and economic activity. Talha Mahmood expressed concern over delays in resolving the issue, noting that perishable goods were at risk of spoilage while businesses were incurring substantial losses due to container detention charges.
He urged the government to immediately engage with affected stakeholders and resolve the matter to prevent further economic losses and safeguard Pakistan’s international business reputation.
The Convener further recommended that where taxpayers rectify genuine errors in their tax returns, their accounts should be restored within 24 to 48 hours. He also stressed the need for an efficient biometric verification system to facilitate taxpayers and observed that early market closure timings were negatively affecting commercial activity.
The Sub-Committee strongly recommended immediate dialogue with transporters and other stakeholders to address their concerns and restore normal business operations at the earliest.
Copyright Business Recorder, 2026