Budget lacks essential pro-business reforms: PBF
KARACHI: The Pakistan Business Forum (PBF) has raised serious concerns over the recently announced Federal Budget 2025, calling it a missed opportunity to stimulate economic growth and restore investor confidence.
Senior Vice President of PBF, Ms Amna Awan, stated that the budget, as presented, lacks the essential pro-business reforms required to build momentum in a stabilizing economy. 'While Pakistan's economy is showing early signs of stabilization, the current budget does not provide the business community with the tools or confidence necessary to drive export-led growth,' said Amna Awan. 'We urge the government to reconsider anti-business tax provisions and to incorporate a more investment-friendly fiscal framework before the Finance Bill is passed by Parliament.'
PBF leadership highlighted the sweeping discretionary powers proposed for tax authorities, warning that such measures would discourage investment, breed harassment, and exacerbate corruption and maladministration.
Malik Khuda Baksh, President of PBF's Karachi Region, described the budget as 'deeply disappointing,' noting that it fails to address the real needs of the industrial sector or meet the expectations of citizens. 'The burden of fiscal adjustment has once again been shifted to the industrial sector, with no adequate relief to counteract rising costs of production,' said Malik. 'At a time when investor trust is fragile, the lack of meaningful incentives or reforms undermines the country's economic potential.'
He also criticized the lack of emphasis on digitalization and one-window operational reforms, describing these as critical tools to improve the ease of doing business. Furthermore, PBF expressed concern that the government has not broadened the tax base, yet has set overly ambitious revenue targets that could harm compliant taxpayers and formal businesses.
With the government projecting GDP growth of 4.2% for FY 2025 up from the current 2.7% PBF stressed that structural flaws within the budget must be addressed to meet these targets realistically.
The Pakistan Business Forum has called for urgent consultations between the government and key business stakeholders to ensure the final Finance Bill supports sustainable economic growth, transparency, and private sector participation.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
17 hours ago
- Business Recorder
Budget lacks essential pro-business reforms: PBF
KARACHI: The Pakistan Business Forum (PBF) has raised serious concerns over the recently announced Federal Budget 2025, calling it a missed opportunity to stimulate economic growth and restore investor confidence. Senior Vice President of PBF, Ms Amna Awan, stated that the budget, as presented, lacks the essential pro-business reforms required to build momentum in a stabilizing economy. 'While Pakistan's economy is showing early signs of stabilization, the current budget does not provide the business community with the tools or confidence necessary to drive export-led growth,' said Amna Awan. 'We urge the government to reconsider anti-business tax provisions and to incorporate a more investment-friendly fiscal framework before the Finance Bill is passed by Parliament.' PBF leadership highlighted the sweeping discretionary powers proposed for tax authorities, warning that such measures would discourage investment, breed harassment, and exacerbate corruption and maladministration. Malik Khuda Baksh, President of PBF's Karachi Region, described the budget as 'deeply disappointing,' noting that it fails to address the real needs of the industrial sector or meet the expectations of citizens. 'The burden of fiscal adjustment has once again been shifted to the industrial sector, with no adequate relief to counteract rising costs of production,' said Malik. 'At a time when investor trust is fragile, the lack of meaningful incentives or reforms undermines the country's economic potential.' He also criticized the lack of emphasis on digitalization and one-window operational reforms, describing these as critical tools to improve the ease of doing business. Furthermore, PBF expressed concern that the government has not broadened the tax base, yet has set overly ambitious revenue targets that could harm compliant taxpayers and formal businesses. With the government projecting GDP growth of 4.2% for FY 2025 up from the current 2.7% PBF stressed that structural flaws within the budget must be addressed to meet these targets realistically. The Pakistan Business Forum has called for urgent consultations between the government and key business stakeholders to ensure the final Finance Bill supports sustainable economic growth, transparency, and private sector participation. Copyright Business Recorder, 2025
Business Recorder
17 hours ago
- Business Recorder
Tax gap touches Rs7.1trn mark: FBR says Rs389bn enforcement steps hinge on parliament nod
ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial, Friday, disclosed before the National Assembly Standing Committee on Finance that the tax gap has reached Rs7.1 trillion in 2024-25 and approval of parliament is needed for enforcement measures of Rs389 billion, and help of provinces to increase tax-to-GDP ratio. On Friday, Minister of State for Finance and Revenue and Chairman FBR presented an overview of Finance Bill proposals and a summary of the FBR Transformation Plan. The FBR chairman disclosed that the FBR has suffered Rs0.5 trillion tax losses due to smuggling from borders, especially smuggling of petroleum products from Chagai district in Balochistan. He informed the committee that FBR has developed an ambitious transformation plan, which will be implemented from December 2025. He said that FBR's real tax, after adjusting for inflation and real GDP, has been one per cent from 2016-18 and -0.3 per cent from 2018–24. He added that Pakistan faces a tax gap of Rs7.1 trillion in 2024–25 and also lags behind peers in the tax-to-GDP ratio. The FBR's revenue as percentage of GDP stood at around 10.4 percent to 10.5 percent. Break-up of tax gap revealed that sales tax gap stood at Rs3.4 trillion, income tax gap Rs2 trillion, customs duty gap Rs0.5 trillion, totalling to Rs5.9 trillion. After including enforcement gap, autonomous growth and other factors, total tax gap stood at Rs7.2 trillion during 2024-25, the FBR chairman said. There is an urgent need to request provinces to help in raising tax-to-GDP ratio. Referring to the importance of enforcement, the FBR chairman said that the FBR has collected Rs50billion extra revenue from the sugar industry during the current year despite less production. This extra Rs50 billion has been collected without any change in tax rates on sugar industry. The digital integration exercise resulted in registration of 1,812 businesses having annual turnover of Rs11.8 trillion. A total of 489 companies are in testing phase and 42 companies are now digitally live. During the meeting, the finance committee expressed serious concern over the increase in tax on profits. The committee chairman directed the FBR to minimise the tax on profits of small depositors. The committee opposed the gradual withdrawal of the extension to the exemption for FATA/ PATA. Chairman Syed Naveed Qamar considered it an economic assassination of small-scale businesses in the area. He directed the FBR to reconsider the withdrawal and provide relief to the locals. The FBR chairman updated the committee on a series of reforms, but noted a lack of enforcement. He said that a Delivery Unit has been set up to drive transformation interventions with all stakeholders. A roadmap is in place to deliver transformational impact by the end of the year. He updated the committee on the Digital Production Tracking, Digital Invoicing, Digital Enforcement Stations, Cargo Tracking System, and Faceless Assessment System. The Minister of State for Finance and Revenue and the Chairman FBR also briefed the committee on potential concerns and justifications. He updated the committee on the current budgetary position, revenue receipts, target for FY 2025–2026, summary of income tax measures, summary of sales tax measures, relief for salaried individuals, relief in super tax, rationalisation in rates of advance tax on rendering of services to non-residents, reintroduction of tax credit for housing loans for small residences, gradual withdrawal of extension to exemption to FATA/ PATA, allowance to coal miners in Sindh to sell to buyers other than IPPs, dividend tax on mutual funds, tax on e-commerce transactions, and an increase in advance tax on cash withdrawals by non-filers. Some committee members raised issues with the Faceless Assessment System in Karachi, citing complaints of high charges, delays in examination and reviews, which caused significant demurrages. The members also complained about the misuse of the Digital Production Tracking and Digital Invoicing System. They stated that the Digital Production Tracking system makes errors in distinguishing between old, used, and scrap material. The FBR was; however, of the view that there are reports of usable material being misrepresented as scrap. Chairman Qamar observed that the digital enforcement station plan may choke port points and that the cargo tracking system will create practical issues. He observed that the mortgage culture has not yet been introduced in the country. He emphasised the need for the FBR to simplify the process of tax credits for housing loans. He directed the FBR to provide a specific table of options with thresholds for the committee's consideration. The committee expressed serious concern over the increase in tax on profits and tax on cash withdrawals. The chairman directed the FBR to minimise the tax on profits of small depositors. The meeting was attended by Omar Ayub Khan, Rana Iradat Sharif Khan, Syed Samiul Hassan Gilani, Ali Zahid, Zeb Jaffar, Muhammad Usman Awaisi, Dr Mirza Ikhtiar Baig, Dr Nafisa Shah, Sharmila Sahiba Faruque Hashaam, Ali Jan Mazari, Muhammad Jawed Hanif Khan, Arshad Abdullah Vohra, Muhammad Ali Sarfraz (on Zoom), Muhammad Mobeen Arif, Usama Ahmed Mela, and Shahida Begum, MNAs. The meeting was also attended by the Minister of State for Finance and Revenue, Secretary Revenue Divisions, Special Secretary Finance and other senior officers from both the divisions. Copyright Business Recorder, 2025
Business Recorder
18 hours ago
- Business Recorder
Non-filers: Govt decides to hike cash withdrawal limit to Rs75,000
ISLAMABAD: The government has decided to increase limit from Rs50,000 to Rs75,000 for charging enhanced rate of withholding tax of 0.8 percent on cash withdrawals from banks by non-filers. The assurance has been given by Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial during review of Finance Bill (2025-26) at a meeting of the National Assembly Standing Committee on Finance held here on Friday at the Parliament House. During the meeting, the FBR chairman informed the committee that the rate has been proposed to be raised from 0.6 percent to 0.8percent. Cash withdrawals from banks: FBR proposes raise in WHT for non-filers Chairman of the committee Naveed Qamar stated that the limit is very low which needs to be increased to Rs100,000. However, both the committee and FBR mutually agreed to raise the limit upto Rs75,000 under the Finance Bill (2025-26). On the conclusion of the committee meeting, the FBR chairman informed media that the Finance Bill (2025-26) has increased the withholding tax rate on cash withdrawal from banks from 0.6 percent to 0.8 percent. Due to an inadvertent mistake in budget speech, the rate of one percent has been announced. 'The proposed rate is 0.8 percent and not one percent as announced in the budget speech (2025-26)', the FBR chairman added. About reduction in incidence of tax on salaried class, Minister of State for Finance Bilal Azhar Kayani said that there is a reduction proposed in all slabs of salaried individuals. Tax rates for salaried individuals for income slab upto Rs3,200,000 has been reduced to provide relief to lower and middle tiers income bracket. Minister of State for Finance Bilal Azhar Kayani said that the Finance Bill 2025-26 has proposed one percent tax on income slab between Rs600,000 and Rs1.2 million under revised salary slabs. Later, the budget meeting of the federal cabinet has approved 2.5 per cent tax on income slab between Rs600,000 and Rs1.2 million. When committee members asked about the reason behind this federal cabinet's decision, Kayani said that the government has increased salary of federal government employees by 10 percent. Therefore, due to limitation of fiscal space, the tax rate was proposed to be increased from one percent to 2.5 percent for the said salary slab. The FBR chairman said that the FBR has proposed only those changes in banking taxation laws which were agreed by the State Bank of Pakistan (SBP). The provisions regarding assessment of banking companies has been made more disclosure oriented to determine true and fair income of the banking companiesand tax payable thereon under Finance Bill 2025-26. 'The extraordinary treatment given to banks in terms of taxation has been reviewed,' Langrial stated. The FBR chairman said that very slight reduction has been made in the rates of the super tax in budget 2025-26 to give a signal to the corporate sector that the government is committed to reduce burden of taxes on compliant sectors. Super tax rates under Section 4C of the Income Tax Ordinance proposed to be reduced by half a percentage point for income slabs between Rs200 million to Rs500 million against each slab respectively. Copyright Business Recorder, 2025
