Latest news with #FinalTaxRegime
Express Tribune
5 days ago
- Business
- Express Tribune
IT sector seeks policy continuity
Pakistan Freelancers Association Chairman Ibrahim Amin cautioned against increasing tax rates on freelancers, who already pay taxes on every transaction in addition to fees charged by freelancing platforms and payment gateway service providers. photo: REUTERS Listen to article Key stakeholders of the IT industry have urged the government to continue reforms and extend incentives for the significant growth of the IT sector and its allied fields to enhance export earnings and create jobs for youth, in line with the objectives of the futuristic "Uraan Pakistan" economic plan. They called for incorporating their recommendations in the upcoming federal budget 2025-26 to enable the IT sector to grow faster, generate more employment opportunities, and contribute more effectively to strengthening the national economy. They also stressed the need for continuity of existing policies and resolution of regulatory and tax-related challenges in the finance bill for 2025-26, particularly for the IT industry and freelancers, to help accelerate sectoral growth and development. Khushnood Aftab, Convener of the IT Committee at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), recommended that the government reduce import duties on essential hardware components such as RAM, SSDs, motherboards, batteries, and displays. This would support the local assembly of fully built imported devices like laptops, desktops, and tablets, fostering local value addition and attracting investment in domestic production facilities. He noted that increased support for the localisation of computer devices and hardware accessories could help Pakistan conserve foreign exchange, create skilled jobs, and position itself as a competitive exporter in regional markets. The locally branded IT hardware sector, he added, deserves focused attention as it directly aligns with the "Made in Pakistan" initiative and the broader Digital Pakistan vision. Furthermore, he emphasised the urgent need for the fair inclusion of local brands in government procurement, which would encourage scale, improve quality, and support domestic industry without compromising standards. Pakistan must also prepare for the growing demand for AI-integrated hardware and edge computing devices, he said, which could be achieved through the introduction of targeted Research and Development (R&D) tax credits and innovation grants to support companies working on emerging technologies within the country, said Khushnood Aftab, who is also Chairman Viper Group. Muhammad Umair Nizam, Senior Vice Chairman of the Pakistan Software Houses Association (P@SHA), said the IT sector is a key driver of economic growth, job creation, and foreign investment. He stressed that extending the Final Tax Regime (FTR) for the next decade would provide the policy stability necessary to encourage reinvestment and help Pakistan maintain its competitive edge in global markets. He also urged the government to harmonise the definitions of IT and Information Technology Enabled Services (ITeS) across federal and provincial tax laws to ensure consistency, eliminate jurisdictional ambiguities, and reduce compliance burdens. A unified framework, he said, would enhance investor confidence, streamline taxation, and promote sectoral growth by creating a predictable regulatory environmentultimately strengthening Pakistan's digital economy and competitiveness. Equally important, he said, is reducing income tax for salaried IT professionals, which would help retain top talent and mitigate the ongoing brain drain. Pakistan Freelancers Association Chairman Ibrahim Amin cautioned against increasing tax rates on freelancers, who already pay taxes on every transaction in addition to fees charged by freelancing platforms and payment gateway service providers. He recommended that the government exempt freelancers and IT companies from withholding tax (WHT) on international transactions under the Exporters' Special Foreign Currency Account (ESFCA) in the upcoming finance bill, following the concurrence of the Ministry of Finance and Revenue. He also urged the finance division to ensure that all features of the Roshan Digital Account (RDA) be extended to ESFCAs for IT companies and freelancers, enabling them to benefit from streamlined banking services and improved access to capital.
Business Recorder
26-05-2025
- Business
- Business Recorder
Consistent policies needed for economic stability: FCCI chief
FAISALABAD: Long term policies are prerequisite to achieve sustained economic stability and, in this connection, the business leaders across the country must adopt a unified stand, said Rehan Naseem Bharara, President Faisalabad Chamber of Commerce & Industry (FCCI). Addressing All Pakistan Chambers Presidents Conference 2025 organised by the RCCI, he said that Pakistan was making steady progress in the 1960s but later on decline started due to multiple reasons including inconsistent policies and international and domestic meltdown. He said that once again serious efforts were made for the revival of the economy which were sabotaged and failed to give the required results. He appreciated the economic vision of Prime Minister Shehbaz Sharif and said that he has not only saved Pakistan from bankruptcy but also put it back on the path of revival. 'However, positive, practical and long term policies are required to consolidate these achievements on a sustained basis,' he said and added that consultation with genuine stakeholders is a must in policy formulation. About the problems confronted by the business community, he expressed concern over the recently amended tax laws and demanded its immediate review. He said that exports are the lifeline of Pakistan and we must satisfy exporters by restoring the Final Tax Regime (FTR). He also stressed the need to bring down the policy rate to single digit in addition to providing electricity to the industrial sector at 9 cent per unit. 'It would help our exportable surplus to compete in the international markets,' he added. About the SME sector, he termed it as an economic growth engine but added that this financially starved sector was facing multiple issues. He said that the SME sector must be facilitated with concessional loans to unlock their immediate growth potential. 'Similarly, the limit of the SME sector should also be enhanced from 80 crore to Rs 2 billion, he said and demanded that the SME sector may also be allowed to import used machinery through concessional loans. President FCCI said that the tax net should be broadened in connection with the documentation of the economy. He acknowledged the importance of women entrepreneurs and said that the government should also take special measures to encourage them by providing them concessional loans. Later President FCCI Rehan Naseem Bharara signed two separate MoUs with Movenpick Hotel Centaurus Islamabad and Wah Nobel Group. Under the MoUs, these institutions would provide services to FCCI members at subsidized rates. Copyright Business Recorder, 2025
Business Recorder
24-05-2025
- Business
- Business Recorder
LCCI says optimistic about govt's response to budget proposals
LAHORE: The Lahore Chamber of Commerce and Industry has expressed optimism the federal government would incorporate its recommendations into the upcoming budget to stimulate economic growth and industrial development. LCCI President Mian Abuzar Shad, Senior Vice President Engineer Khalid Usman and Vice President Shahid Nazir Chaudhry said that the recommendations for Federal Budget 2025-26 have already been forwarded to the government and concerned departments. They hoped that these recommendations would be given due consideration to address the country's pressing economic challenges. The LCCI's budget proposals come at a time when Pakistan's economy shows signs of gradual recovery, with GDP growth improving from 0.21% in 2022-23 to 2.38% in 2023-24. The current account deficit has also narrowed significantly, dropping from $3.27 billion to $1.69 billion with a surplus of $1.2 billion recorded in the first half of the current fiscal year. 'Despite these positive indicators, the economy remains vulnerable due to stagnant industrial growth, soaring public debt exceeding Rs 70 trillion and a persistent trade deficit of $24 billion in 2023-24. The industrial sector, a critical driver of economic activity, expanded by a mere 1.21%, while large-scale manufacturing saw negligible growth of 0.07%, underscoring the need for urgent policy interventions', the LCCI office-bearers added. To address these challenges, the LCCI has proposed a series of strategic measures. On the tariff front, the LCCI advocates for a cascading duty structure, with raw materials taxed at 0%, intermediate goods at 5-8% and finished products at 18% to encourage local value addition. It also calls for duty-free imports of wastewater treatment plants to help industries meet environmental standards and maintain export competitiveness. Additionally, the LCCI stresses the importance of protecting the local pharmaceutical industry by maintaining tariff shields on 22 essential active pharmaceutical ingredients (APIs) to reduce import dependency and ensure health security. In terms of policy reforms, the LCCI has stressed the need for reducing the policy interest rate to 6% to lower borrowing costs and stimulate private-sector investment. The LCCI has also recommended regionally competitive energy tariffs to align Pakistan's industrial costs with those of neighboring countries like India and Bangladesh. Other key proposals included reinstating the Final Tax Regime for exporters to simplify compliance, introducing a fixed tax regime for traders to broaden the tax base and capping individual and association taxes at 29% to prevent brain drain and encourage documentation. The LCCI has also highlighted the importance of promoting electric vehicle adoption, starting with public transport and two-wheelers alongside incentives for local EV manufacturing. Procedural improvements form another critical component of the LCCI's recommendations. The LCCI has called for the full digitization of the Federal Board of Revenue to minimise human intervention and curb corruption. It has also urged the government to expedite tax refunds, particularly for exporters, by ensuring that the FASTER system processes refunds within 72 hours, with compensation for delays. The LCCI has further proposed abolishing the Sindh Infrastructure Development Cess for exporters, automating sales tax filings and extending audit cycles to five years to reduce harassment of compliant businesses. Sector-specific recommendations included measures to support the IT and freelancing industry, such as allowing foreign exchange accounts and offering rebates to IT exporters to counter capital flight. In agriculture, the LCCI has advocated for a progressive income tax on large landholdings while exempting small farmers. The real estate sector has been advised to align property valuations with market rates to document hidden wealth, while the textile industry has been recommended for the reinstatement of the Drawback of Local Taxes and Levies scheme and an increase in duty drawbacks to 3%. LCCI President Mian Abuzar Shad has also stressed the need for broader macroeconomic reforms, including the privatisation of loss-making state-owned enterprises (SOEs) to reduce fiscal burdens, curbing non-essential government expenditures and cracking down on smuggling networks that cost the economy billions annually. Engineer Khalid Usman that the proposals are designed to foster growth through equity, efficiency and ease of doing business, calling for decisive government action to address debt, expand the tax net and boost exports. Vice President Shahid Nazir Chaudhry said that Pakistan's economic survival hinges on industrialisation and stable, long-term policies rather than ad hoc measures. Copyright Business Recorder, 2025
United News of India
23-05-2025
- Business
- United News of India
IMF links tax relief to spending cuts in budget talks with Pakistan
Islamabad, May 23 (UNI) The International Monetary Fund (IMF) has signalled its reluctance in supporting broad tax relief for Pakistan's salaried, property, beverage, or export sectors unless the government matches such measures with spending cuts or meets a higher revenue target. This position has emerged as the main theme of the ongoing talks in Islamabad, led by IMF Director for the Middle East and Central Asia, Jihad Azour. The delegation is expected to conclude its visit today (Friday), with budget discussions likely to continue virtually according to The News International. The only clear exception to the IMF's austerity stance is defence spending, which Islamabad plans to increase due to regional security concerns. On Thursday, Prime Minister Shehbaz Sharif met the IMF team and requested a delay in tax hikes, including raising Federal Excise Duty on fertiliser from 5% to 10% and imposing a 5% tax on pesticides. While the IMF may agree partially, salary and pension increases are expected to be modest amid a stalled rightsizing drive. 'We are clueless about how this number crunching for finalising budgetary estimates will be done,' said one source, as the government prepares to announce the budget on 2 June, reports Dawn. A top official said the tax strategy 'will set the country's direction for the next few years', with ongoing efforts to persuade the IMF to lower income tax for salaried workers. The Federal Board of Revenue's (FBR) revenue target is projected to exceed PKR 14.1 trillion ($50.5 billion), depending on whether the Finance Division can rein in spending. To shore up finances, Pakistan plans to raise $1 billion in commercial funding by June 2025, supported by a $500 million guarantee from the Asian Development Bank (ADB). Standard Chartered and Dubai Islamic Bank are expected to deliver a $700 million loan, while three UAE-based banks have been asked to provide $100 million each. In parliament, the FBR told lawmakers that the IMF would not allow a return to the Final Tax Regime for exporters, having already introduced a Minimum Tax Regime. The Fund also flagged distortions, such as local exporters being taxed while imported goods remain exempt. Meanwhile, Prime Minister Sharif reiterated his government's commitment to institutional reform and economic recovery. '...Pakistan is now moving from economic stability toward sustainable growth,' he said. The IMF has pushed for broader reforms, including enforcing agriculture income tax from September 2025, improving retail taxation, and introducing a carbon levy. The government is expected to cut development spending to manage any shortfalls, while legal reforms could unlock PKR 367 billion ($1.3 billion) in disputed tax revenue. A Supreme Court ruling alone could free up PKR 120 billion ($430 million). Pakistan entered a new IMF programme in early 2024 following a short-term standby arrangement that ended in March 2024. The current extended arrangement aims to stabilise the economy through structural reforms, fiscal consolidation, and improved governance. The country has faced persistent economic challenges including inflation, dwindling foreign reserves, and fiscal deficits, necessitating continued IMF support to maintain macroeconomic stability.
Business Recorder
23-05-2025
- Business
- Business Recorder
NA body informed: sales tax imposition at import stage under EFS likely
ISLAMABAD: Federal Board of Revenue (FBR) Member Inland Revenue Najeeb Ahmad on Thursday disclosed before the National Assembly Standing Committee on Finance that the sales tax is likely to be imposed on the import of raw materials/inputs used in the export of finished goods under the Export Facilitation Scheme (EFS) in coming budget (2025-26). This budget proposal of the FBR has been disclosed by FBR Member IR Policy during the meeting of the National Assembly Standing Committee on Finance on Thursday. The FBR Member informed that there is a likelihood of imposition of sales tax at the import stage under the EFS. This proposal was overlooked during last year budget finalisation exercise. The International Monetary Fund (IMF) wants standardisation of sales tax rates and abolition of lower rates or special tax regimes for all sectors. FBR endorses viewpoint of Senate panel: Undue taxation relocating businesses to Dubai Last year, sales tax zero rating on local supplies to registered exporters authorised under Export Facilitation Scheme, was withdrawn through Finance Act, 2024. He stated that Prime Minister's Committee on Export Facilitation Scheme (EFS), headed by Federal Minister for Planning and Development Ahsan Iqbal has also submitted recommendations on the EFS. On the proposal of exporters to restore final tax regime, FBR Member stated that the IMF would not allow restoration of Final Tax Regime (FTR) for exporters, FBR Member said. FBR Member said that the IMF had objected last year about special tax treatment to exporters as compared to other sectors which are paying standard rate of corporate tax. Therefore, the special class of taxpayers (exporters) were brought under the normal tax regime. Responding to this, Naveed Qamar MNA objected that bringing exporters under the normal tax regime does not allow double taxation on exporters. This kind of double taxation to impose minimum tax regime as well as normal tax regime on exporters is not justified. Karachi Chamber of Commerce and Industry (KCCI) President, Muhammad Javed Balwani informed the committee that the exporters are paying taxes from 29 percent to 45 percent under normal tax regime. The shift from a one percent turnover-based FTR to the standard taxation at 29% of taxable profit has increased the tax burden and compliance requirements for exporters. This disrupts the ease of doing business, reduces transparency, and affects the competitiveness of export-oriented businesses. He said that the small and medium exporters are vanished from the market due to high tax rates and financial cost of business. 'We do not have any cash flow to do business. The refunds under 'FASTER' system are paid in months against declared time of 72 hours,' he stated. The last budget removed zero-rating on local supplies for exporters under the Export Facilitation Scheme (EFS), increasing their cost burden significantly. Additionally, the withdrawal of Regional Competitive Energy Tariffs (RCET) has raised utility rates (power and gas), he added. Copyright Business Recorder, 2025
