The FBR tax relief measures could be expanded as the Federal Board of Revenue (FBR) indicated that the government is considering further reductions in the tax burden on businesses, including a possible complete withdrawal of super tax and a reduction in the sales tax rate.
The development came during a meeting of the Sub-Committee of the Senate Standing Committee on Finance, where business representatives raised concerns over high input costs, expensive financing, elevated electricity tariffs and what they described as harassment by tax authorities.
Business leaders warned that the difficult operating environment was discouraging investment and industrial activity, with several multinational companies reportedly scaling down or leaving Pakistan.
FBR Considers Further Tax Relief For Businesses
Hamid Ateeq Sarwar, Member FBR, told the committee that the government had already introduced several tax relief measures since 2025 and remained willing to provide additional relief to taxpayers.
He said super tax was among the areas being reviewed for further reduction. The government was also examining options to lower the sales tax burden faced by businesses.
According to the FBR official, the government had already absorbed a revenue impact of around Rs361 billion to facilitate businesses and encourage economic activity.
He said the tax burden was being rationalised while taking into account Pakistan’s fiscal position and import requirements.
The measures already introduced include tax relief for salaried individuals, a reduction in super tax and the complete removal of super tax for exporters.
Sarwar also informed the committee that exporters’ facilitation committees had been established in Karachi, Lahore, Sialkot, Faisalabad, Islamabad and Multan to address taxation-related concerns.
Business Community Warns Of Investment Decline
Mian Zahid Hussain, Chairman of the Policy Advisory Board of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), and Tariq Khan Jadoon, Vice President, highlighted the challenges facing businesses.
They argued that high taxation, expensive financing, rising input costs and interactions with FBR field formations were making it increasingly difficult for companies to operate in Pakistan.
They warned that continued pressure could encourage more businesses to shift their operations abroad.
According to the business representatives, industries are currently operating at only around 40% to 45% of capacity, highlighting the pressure faced by manufacturers.
Committee Convener Muhammad Talha Mahmood said the meeting was aimed at finding ways to stimulate economic activity and create a more favourable environment for businesses.
He expressed concern that high energy costs and the existing tax structure were forcing companies to reduce their operations or leave the country.
Business Leaders Seek Tax And Regulatory Reforms
Zahid Hussain said national economic policy appeared to place excessive emphasis on revenue collection instead of economic growth.
He called for reductions in advance and withholding taxes, rationalisation of customs duties and simpler audit procedures.
He also urged authorities to review factory surveillance mechanisms and reduce compliance requirements that increase the cost of doing business.
Tariq Khan Jadoon said Pakistan continued to have an advantage in terms of labour costs, but businesses were struggling with high electricity prices and regulatory challenges.
He called for a broader tax base, arguing that the government should bring new sectors and businesses into the tax net rather than repeatedly increasing the burden on existing taxpayers.
Business representatives also complained about the conduct of FBR field formations.
They alleged that frequent notices, audits and enforcement actions had created uncertainty and made it difficult for taxpayers to plan their business activities.
The committee stressed that excessive taxation could ultimately undermine government revenue by discouraging investment and shrinking the formal economy.
Committee Seeks Investor Protection Framework
Talha Mahmood also questioned the effectiveness of existing policies designed to attract foreign investment.
He sought details regarding mechanisms for protecting investors and facilitating share transfers.
The convener directed relevant authorities to provide the Sub-Committee with a comprehensive briefing on the existing investment framework.
The committee also expressed concern over the absence of the Secretary Finance from the meeting. Mahmood directed the secretary to ensure attendance at the next meeting and warned that continued absence could result in the matter being referred to the Senate Privileges Committee.
He said sustainable economic growth required business-friendly policies, transparent governance and competent officials capable of developing policies that encourage investment, industrialisation and entrepreneurship.
FBR Working On Taxpayer Facilitation Measures
FBR officials also briefed the committee on measures being developed to improve taxpayer facilitation.
The Board is working on a mobile application for tax reimbursements and plans to designate specific facilitation days in major commercial centres.
Talha Mahmood recommended that taxpayers who correct genuine errors in their returns should have their accounts restored within 24 to 48 hours.
He also emphasised the importance of an efficient biometric verification system to make tax-related services easier for citizens and businesses.
The committee further observed that early market closing hours were negatively affecting commercial activity and called for measures to support businesses.
Goods Transport Strike Raises Economic Concerns
The Sub-Committee also discussed the ongoing goods transport strike and its impact on economic activity.
Talha Mahmood expressed concern over delays in resolving the dispute, warning that perishable goods could spoil while businesses faced significant losses because of container detention charges.
He urged the government to immediately engage with transporters and other affected stakeholders to resolve their concerns and restore normal freight movement.
The committee strongly recommended immediate dialogue to end the dispute and minimise further losses.
The discussions highlighted the broader challenge facing Pakistan’s economy: balancing revenue collection with policies that allow businesses to remain competitive.
While the FBR has indicated that further FBR tax relief is under consideration, business representatives are seeking deeper structural reforms covering taxation, energy costs, regulation and enforcement.