Islamabad, May 23, 2025 – In a stunning blow to the country’s vital export sector, the Federal Board of Revenue (FBR) has flatly denied any plans to reinstate the Final Tax Regime (FTR) for exporters in the upcoming Budget 2025-26.
This firm stance, revealed during a heated session of the National Assembly Standing Committee on Finance, has ignited alarm bells across Pakistan’s business community, particularly among struggling exporters already reeling under an escalating tax burden.
Despite persistent appeals from exporters and leading trade bodies, the FBR stood its ground. A senior FBR member informed the committee that the final tax regime, which previously allowed exporters to pay a fixed turnover-based tax, is off the table—primarily due to stern opposition from the International Monetary Fund (IMF).
“The IMF has categorically objected to any special tax treatment for exporters, insisting that all sectors must fall under the standard corporate tax regime,” stated FBR Member Inland Revenue, Najeeb Ahmad. He emphasized that the decision to eliminate the final tax regime aligns with IMF directives to standardize Pakistan’s tax system.
Adding to the exporters’ woes, Ahmad also disclosed that the upcoming budget might include sales tax on the import of raw materials under the Export Facilitation Scheme (EFS)—a measure previously overlooked. The move would further hike production costs for export-based industries, already suffering from the withdrawal of zero-rating and Regional Competitive Energy Tariffs (RCET).
The business community responded with fury. Karachi Chamber of Commerce and Industry (KCCI) President, Muhammad Javed Balwani, slammed the decision, warning that exporters are now subjected to an unbearable tax load ranging between 29% and 45%. “Small and medium exporters are being forced out of business. There is no working capital left—refunds under the ‘FASTER’ system take months despite a promised 72-hour timeline,” he lamented.
PPP MNA Naveed Qamar also criticized the move, arguing that forcing exporters into the normal tax regime results in double taxation, crushing their financial viability and eroding competitiveness.
The final verdict on tax policy for exporters may not be written yet, but the FBR’s firm dismissal of the final tax regime has sparked a fierce debate. With Budget 2025-26 looming, exporters are bracing for impact, fearing the loss of their competitive edge on the global stage.