In a revelation that has sent shockwaves through the country’s economic corridors, the Federal Board of Revenue (FBR) has officially admitted that high tax rates and rigid fiscal policies are triggering an alarming capital flight to Dubai.
During a heated session of the Senate Standing Committee on Finance, FBR’s top brass acknowledged a mass migration of Pakistani businesses, investors, and even real estate capital to the glittering commercial hub of the UAE — Dubai.
Hamid Attique Sarwar, Member Inland Revenue Operations, did not hold back while addressing the committee, chaired by Senator Saleem Mandviwalla. “Yes, businesses are moving to Dubai, and yes, we are losing revenue,” he confirmed, responding to pressing questions from concerned lawmakers. The committee, echoing widespread public sentiment, lambasted the FBR for driving enterprise away with suffocating tax laws.
Senator Farooq H. Naek added fuel to the fire by pointing out that property tax rates for non-filers currently hover between a crushing five to 35 percent. He warned that many Pakistanis are stashing undeclared income abroad while comfortably owning properties in Dubai, illustrating the massive scale of tax evasion — and FBR’s failure to curb it.
The committee members issued a dire warning: If Pakistan fails to build a business-friendly environment, the exodus to Dubai will accelerate. Senator Mandviwalla argued passionately that instead of chasing businesses that have shifted to Dubai, the government must focus on making Pakistan a viable, competitive hub.
In response, FBR defended its role, saying it only implements what Parliament legislates. Still, the department revealed a new proposal to hike penalties for tax evasion, increasing the maximum fine from Rs500,000 to a much higher, yet undisclosed, amount.
Meanwhile, enforcement is in full swing. Daily raids are underway in Karachi, Lahore, and Islamabad, with 20 businesses sealed daily for violations. In a major win, FBR reported a 34.5% tax revenue increase from its crackdown on the sugar industry, integrating 95% of that sector into real-time monitoring.
Despite these efforts, the elephant in the room — the capital rush to Dubai — looms large. The committee has now demanded a full FBR report outlining pending refunds and the broader economic fallout. As of now, Pakistan stands at a crossroads: reform or risk losing more to Dubai’s open arms.