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Business Recorder
3 days ago
- Business
- Business Recorder
FPCCI opposes new taxes in budget
KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Vice President Muhammad Aman Paracha has voiced strong opposition to reports of new taxes being imposed on existing taxpayers in the upcoming federal budget for the fiscal year 2025-26. The organization has urged the government to refrain from introducing new taxes on imports, exports, and other sectors in order to promote national trade, industrial growth, and to encourage new investments. The FPCCI warned that if the government imposes additional taxes under pressure from the IMF, the FPCCI will actively oppose such measures. FPCCI Vice President Muhammad Aman Paracha emphasized the need to separate tax policy from tax administration to avoid conflicts of interest. He further suggested that the budget-making process should not be treated merely as a routine financial exercise but should be transformed into a strategic economic tool. Aman Paracha stressed the importance of expanding the tax net to include all untaxed and under-taxed sectors, noting that imposing additional taxes on those who are already compliant would have adverse effects. He highlighted that business activity is already sluggish and the business community is struggling to stay afloat. Imposing further tax burdens on existing taxpayers could lead to decreased revenue collection as it would open more avenues for tax evasion. He also expressed concerns over amendments introduced through Ordinance IV of 2025, particularly Sections 138(3A), 140(6A), and 175C, stating that these amendments grant excessive powers to tax authorities and violate Articles 4, 18, and 77 of the Constitution. He warned that such changes would significantly erode investor confidence. Paracha proposed the development of a harmonized structure for General Sales Tax (GST), featuring a unified compliance portal. He recommended gradually reducing the GST rate to 12% to lower business costs for the formal sector and stimulates economic growth. He also called for comprehensive reforms in Pakistan Customs, identifying outdated laws, tariff segmentation, under-invoicing, and weak enforcement as major challenges. He underscored the need for economic policy to strike a balance between revenue requirements and industrial development, especially through measures that boost Pakistan's export potential and attract investors. Finally, Muhammad Amaan Paracha appealed to Prime Minister Shehbaz Sharif to immediately release the long-pending Rs23 billion subsidies related to additional electricity consumption and ensure that funds for this are allocated in the upcoming 2025-26 federal budget. Copyright Business Recorder, 2025
Business Recorder
28-05-2025
- Business
- Business Recorder
SAI submits comprehensive proposals for federal budget
ISLAMABAD: The SITE Association of Industry (SAI) has submitted comprehensive budget proposals for the Federal Budget 2025-26, advocating for policy measures to stimulate industrial growth and enhance Pakistan's export competitiveness. In budget recommendations, SAI President Ahmed Azeem Alvi and former president Riaz Uddin, who chairs the association's taxation committee, emphasized the need to transform budget-making into a strategic economic tool rather than maintaining it as a routine fiscal exercise. The industry body emphasized the institutional separation of tax policy formulation and tax administration to avoid conflicts of interest and align with global best practices. Drawing comparisons with the UK and other neighbouring countries' models, SAI suggested the establishment of a structure where tax policy rests with the Ministry of Finance, revenue sharing is managed by an independent finance commission, and consumption taxes are regulated by a dedicated council. Addressing structural weaknesses in the taxation system, SAI noted that Pakistan's income tax base remains narrow-just 9 to 10 percent of GDP- while the formal industrial sector bears a disproportionate tax burden. The association recommended widening the tax net to include all untaxed and under-taxed sectors and capping the maximum income tax rate on business income at 25 percent over the next three years. It further proposed the abolition of the Super Tax, terming it an outdated and unjust burden, and called for relief on inter-corporate and individual dividend taxation. Ahmed Azeem Alvi and Riaz Uddin expressed serious concerns about recent amendments to the Income Tax Ordinance through Ordinance IV of 2025, particularly changes to Sections 138(3A), 140(6A) and 175C of the Income Tax Ordinance. According to SAI, these amendments grant excessive powers to tax authorities and contravene Articles 4, 18, and 77 of the Constitution. The association demanded that the amendments be withdrawn immediately, arguing that they could deter compliance, encourage informality, and diminish investor confidence. Regarding sales tax reforms, SAI leaders pointed out persistent challenges due to overlapping federal and provincial jurisdictions. It proposed a harmonized General Sales Tax (GST) structure supported by a single compliance portal, enabling seamless cross-jurisdictional input tax adjustments. The association stressed the need for expeditious refund mechanisms, with refund payment orders (RPOs) to be issued within five working days of claim submission and payments processed shortly thereafter. Concerns were also raised about the prevailing 22 percent combined sales tax and further tax rate, which the association believes fuels evasion and hinders formalization of the economy. A review of the tax rate structure was urged to reduce distortions and incentivize registration. SAI Chief urged the government to implement progressive reductions in the sales tax rate, targeting a 15% rate over the next three years. The association argues that this reduction will help lower the cost of doing business for the formal tax-paying sector and promote overall economic growth. He also called for the abolition of the additional sales tax, which it claims encourages the continuation of the informal sector by allowing businesses to evade registration and tax obligations. According to the association, this perpetuates a cycle of non-compliance, hindering the formalization of the economy. Furthermore, the association recommends that sales tax exemptions on essential goods, including basic staple foods, pharmaceuticals, and education-related products, should be maintained. These exemptions are seen as crucial in providing a safety net for the common man, particularly in the face of inflationary pressures. SAI also requested the restoration of zero-rating on export facilitation schemes and educational stationery, as promised by the Finance Minister in his budget closing remarks in June 2024. The association believes that reinstating these exemptions will promote the export sector and ease financial burdens on educational institutions. In addition, the association proposed the introduction of a lower sales tax rate of 5% for other essential and deserving items to further reduce the financial strain on consumers. The industry body called for the removal of area-specific sales tax exemptions in the former tribal areas (FATA/PATA). The association stresses that such exemptions should not continue in any form, in line with the broader goal of tax uniformity and fiscal reform across the country. Ahmed Azeem Alvi and Riaz Uddin also emphasized for comprehensive reforms in Pakistan Customs, highlighting outdated legislation, tariff fragmentation, under-invoicing, and ineffective enforcement as key challenges. It recommended a revision of the Customs Act to align with WTO and WCO standards, simplification of duty structures, and adoption of a unified valuation and appraisal system. SAI advocated for the port of entry to be designated as the sole revenue collection point to prevent revenue leakage and ensure smooth inland movement of goods. On social welfare schemes, they criticized the current management of employee welfare programs (EOBI, PESSI/SESSI, WWF, and WPPF) as inefficient and outdated. The schemes largely funded by employers, offer minimal influence to contributors over fund management and disbursement. The association proposed the integration of these schemes into a unified authority with digital interfaces, central governance, and tripartite representation from employers, employees, and regulators. Disbursements, it suggested, should be made via mobile payment platforms, while health and related services could be outsourced to third-party providers. The budget proposals underscore SAI's position that economic policy should balance revenue needs with industrial growth objectives, particularly through measures that enhance Pakistan's export potential and attract productive investment. Copyright Business Recorder, 2025
Express Tribune
28-05-2025
- Business
- Express Tribune
SAI urges tax reforms in budget proposals
Listen to article The SITE Association of Industry (SAI) has submitted its budget proposals for 2025-26, urging the government to adopt structural tax reforms aimed at boosting industrial growth and improving export competitiveness. SAI President Ahmed Azeem Alvi, who also heads the association's taxation committee, stressed that budget-making must evolve into a strategic economic exercise rather than remain a routine fiscal event. A central proposal is the separation of tax policy formulation from tax administration to avoid conflicts of interest. Citing global best practices, SAI recommended assigning tax policy to the Ministry of Finance, entrusting revenue sharing to an independent finance commission, and regulating consumption taxes through a dedicated council. SAI highlighted that Pakistan's narrow income tax base — just 9% to 10% of GDP — forces the formal industrial sector to shoulder an unfair tax burden. The association urged expansion of the tax net to include untaxed and under-taxed sectors and proposed capping the income tax rate on business income at 25% over the next three years. The group also called for the abolition of the super tax, labelling it outdated and inequitable, and sought relief on inter-corporate and individual dividend taxation. Expressing concern over recent changes to the Income Tax Ordinance via Ordinance IV of 2025, particularly to Sections 138(3A), 140(6A), and 175C, SAI argued these amendments give unchecked powers to tax officials and violate Articles 4, 18, and 77 of the Constitution. It warned the measures would deter compliance, promote informality, and hurt investor confidence.
