Karachi, April 18, 2025 – The Karachi Chamber of Commerce and Industry (KCCI) has strongly recommended that the Federal Board of Revenue (FBR) waive mandatory factory visits for the issuance of income tax exemption certificates, citing disruptions to business operations and inefficiencies caused by the current procedures.
In its budget proposals for the fiscal year 2025–26, the KCCI emphasized that the biannual issuance of tax exemption certificates under Section 159 of the Income Tax Ordinance 2001—especially when coupled with physical factory inspections by tax officials—poses a significant burden on businesses. These inspections not only interrupt daily operations but also increase the risk of bureaucratic delays, human intervention, and potential harassment, according to the chamber.
The KCCI pointed out that businesses already submit detailed sales tax returns and Annexure H, which provide adequate documentation for verifying compliance. Therefore, factory visits are unnecessary and should be replaced by a digital or document-based verification system.
In addition, the KCCI criticized the FBR’s requirement that trade bodies and chambers furnish proof of non-profit status via a certificate from the Pakistan Centre for Philanthropy (PCP). The chamber argued that this step is redundant, as organizations like KCCI are already licensed by the Directorate General of Trade Organizations (DGTO), which serves as a legitimate certification of their non-profit nature.
To streamline the tax exemption process, KCCI proposed the issuance of tax exemption certificates valid for three years instead of requiring renewals every six months. This change would reduce paperwork, provide long-term clarity, and minimize the frequency of engagement with tax authorities.
The chamber also called for the elimination of the PCP requirement altogether, advocating for recognition of DGTO licenses as sufficient evidence to obtain certificates of exemption for tax purposes.
By implementing these recommendations, the KCCI believes the FBR can reduce inefficiencies, promote voluntary compliance, and foster a more business-friendly environment. These reforms would not only improve transparency but also build greater trust between taxpayers and tax authorities, ultimately contributing to a more efficient and cooperative tax regime.