Karachi, July 25, 2025 – In a move that has sent shockwaves across Pakistan’s fertilizer industry, the Federal Board of Revenue (FBR) has abruptly revoked a crucial tax exemption certificate previously granted to Engro Fertilizer Limited, one of the sector’s top players.
The exemption—initially issued for the Tax Year 2026 and covering the period from July to December 2025—has been cancelled by the Large Taxpayers Office (LTO) Karachi, FBR’s largest revenue-collecting body. The move has raised red flags among industry stakeholders, investors, and policy observers, who view it as part of an increasingly aggressive revenue drive.
A tax consultant confirmed to PkRevenue that “Engro Fertilizer Limited is now obligated to deduct and deposit applicable taxes, as the earlier tax exemption has officially been nullified.”
LTO Karachi officials, when contacted, cited Section 153(1)(a) of the Income Tax Ordinance, 2001, stating the exemption certificate could only be retained if the company’s advance tax liability had been fully discharged. “Our review revealed that Engro Fertilizer’s advance tax payments for the period up to December 2025 remain pending,” officials stated in an internal communication.
This bold step has plunged the fertilizer industry into uncertainty. Industry insiders warn of widespread unease, with some describing the atmosphere as “chaotic.” One senior tax advisor voiced concern: “How can we expect investment when compliant corporations like Engro Fertilizer are punished, while the undocumented economy thrives untouched?”
Adding fuel to the fire, several tax professionals are reportedly considering relocation to friendlier business climates in Saudi Arabia and the UAE, where regulatory enforcement is seen as more stable and respectful.
Critics argue that the FBR’s decision contradicts the principle of equitable taxation. Rather than broadening the tax net to include Pakistan’s vast informal economy, authorities are intensifying scrutiny on documented sectors such as fertilizer—already burdened with complex compliance requirements.
Ironically, dozens of government-allocated vehicles meant for outreach and enforcement remain idle as officers reportedly prefer the comfort of air-conditioned offices. Meanwhile, in an alarming revelation, sources claim the FBR has already collected large sums of advance taxes earmarked for FY2026 to meet last fiscal year’s targets.
The business community is demanding an urgent review, stressing that tax exemption frameworks must remain consistent and predictable. They urge the Ministry of Finance and FBR to adopt a balanced, fair approach to protect the fertilizer sector—an essential pillar of Pakistan’s agricultural economy.