Karachi, October 23, 2024 – The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has issued a strong appeal for the protection of genuine taxpayers while urging the Federal Board of Revenue (FBR) to focus its enforcement efforts exclusively on tax evaders.
During a meeting led by FPCCI President Atif Ikram Sheikh with FBR Chairman Rashid Mahmood Langrial, the business community emphasized the need to end the harassment of legitimate taxpayers, while simultaneously advocating for a more collaborative approach to tax collection.
Sheikh underscored that genuine and compliant taxpayers should not be subjected to undue scrutiny, arguing that notices and enforcement actions should target only defaulters and tax evaders. In response, Langrial expressed a desire for the FPCCI to support FBR’s efforts to promote transparent and accurate tax filings across all sectors of the economy. The FPCCI delegation agreed to this, provided that FBR’s policymaking and enforcement are conducted in a consultative and fair manner.
FPCCI acknowledged a recent victory for the business community, with Sheikh noting that the FBR had withdrawn its demand for chief financial officers (CFOs) of companies to sign affidavits regarding tax returns. Sheikh praised this move, calling the demand unnecessary and redundant, given that the Sales Tax Act of 1990 already provides adequate provisions for responsible tax filing.
Saquib Fayyaz Magoon, Senior Vice President of FPCCI, voiced concerns over the FBR’s ambitious revenue collection target of PKR 12.97 trillion, representing a staggering 40% year-on-year increase. He pointed out that this target is disproportionate to the country’s sluggish economic growth of only 2-3%. Magoon warned that this could lead to the imposition of additional taxes, mini-budgets, and further burdening of already compliant taxpayers.
Magoon also criticized the abrupt withdrawal of the 1% final liability for exporters and the sales tax exemption on local supplies to exporters under the Export Finance Scheme (EFS). He stressed that such erratic policymaking has shaken the business community’s confidence in government policies.
Furthermore, Magoon highlighted that the Tajir Dost Scheme (TDS) had been implemented without sufficient consultation and noted that it had failed to meet its revenue collection target by a staggering 99%. He called for a revision of the scheme through proper stakeholder engagement. The FPCCI also raised ongoing concerns about the controversial SRO. 350 (I)/2024, which has been amended twice yet remains problematic due to a lack of consultation with relevant stakeholders.
The FPCCI strongly urged the revival and expansion of the Alternate Dispute Resolution Committees (ADRCs) to handle disputes under customs, sales tax, excise duties, and income tax. Magoon also proposed simplifying the EFS, which currently suffers from complex procedures, duplicate documentation, and system glitches that slow down the process and undermine its effectiveness.
In a cautionary note, Magoon warned that the inclusion of Export Processing Zones (EPZs) in the regular tax regime would lead to substantial losses and deter investment. He also criticized the exclusion of local industries from the EFS and called for exporters to be reinstated under the Final Tax Regime (FTR).
Khurram Ejaz, a member of the Prime Minister’s committee on ports, questioned why Pakistani ports and terminals cannot operate around the clock, as is standard practice globally. He emphasized the need for the FBR’s LIVE project to be fully implemented to resolve customs appraisal issues, reduce dwell times, and modernize port facilities.
In response, FBR Chairman Langrial acknowledged many of FPCCI’s concerns, agreeing in principle to address issues related to tax rates, ambiguities in SRO 350, and the need for a consultative approach in policy formulation. However, he cautioned that lowering tax rates was currently not feasible given the economic challenges of the past two to three years, although he noted that key economic indicators were beginning to show signs of recovery.
The meeting concluded with a commitment from both sides to continue dialogue and cooperation, with FPCCI pushing for greater reforms and FBR assuring responsiveness to the business community’s grievances.