Karachi, April 6, 2026 – Chairman of the Businessmen Group (BMG), Muhammad Zubair Motiwala, has called on the Federal Board of Revenue (FBR) to immediately restore the zero-rated sales tax for Pakistan’s export sector, warning that ongoing global and regional tensions could severely impact the country’s economy.
In a detailed letter addressed to Federal Minister for Finance and Revenue Muhammad Aurangzeb, Motiwala highlighted growing concerns within the business community over the economic fallout of escalating US-Iran tensions. He stated that rising geopolitical instability is already affecting global trade routes, increasing freight and insurance costs, and creating volatility in energy markets.
According to him, Pakistan is already facing challenges such as stagnant exports, weakening industrial activity, and declining remittance inflows, all of which are putting pressure on the external sector. In this context, he emphasized the urgent need for policy measures to support exporters.
📊 Key Proposal: Restoration of Zero-Rating
Motiwala strongly recommended restoring zero-rating of sales tax on inputs for key export-oriented sectors, including textiles, leather, surgical instruments, carpets, and sports goods. These sectors account for nearly 80–85% of Pakistan’s total exports, making their financial stability critical.
He argued that the shift from zero-rating to a refund-based system has created serious liquidity problems for exporters due to delayed refunds and increased borrowing costs. Restoring zero-rating, he said, would improve cash flow, reduce financial pressure, and enhance global competitiveness.
📦 Proposal for Customs Valuation Reform
The BMG chairman also suggested a shift in customs valuation from Cost and Freight (CNF) to Ex-Works (EXW) pricing. He explained that CNF includes rising freight and insurance costs, which inflate the tax burden on imports. EXW valuation, he noted, would provide a more transparent and fair system, lowering input costs and improving industrial efficiency.
⚡ Energy Crisis and Industrial Challenges
Motiwala expressed concern over Pakistan’s high industrial electricity tariffs, which currently range between 14 to 16 US cents per kilowatt hour. He said such rates are uncompetitive and hinder industrial growth.
He pointed out that although the government introduced the Incremental Consumption Package (ICP), Karachi’s industries have not received their fair share of benefits. He claimed that around Rs7 billion released for Karachi under the package has not been passed on to industrial consumers, while pending relief is estimated between Rs28 billion and Rs33 billion.
This disparity, he warned, has placed Karachi’s industries at a disadvantage compared to other regions.
🔥 Gas Tariffs and Supply Issues
Motiwala also highlighted rising gas tariffs and inconsistent supply as major concerns. He stressed that gas is a critical input for export industries and should be priced on a cost-of-service basis rather than as a revenue-generating tool.
He urged the government to ensure transparent pricing, consistent supply, and priority allocation of gas to export-oriented sectors.
🚢 Rising Logistics Costs
The BMG chairman noted that escalating global shipping costs and war-risk insurance premiums, driven by geopolitical tensions, have increased the burden on exporters. He called for the immediate revival of freight subsidy schemes to help exporters remain competitive in international markets.
💰 Pending Refunds and Financial Stress
Motiwala also raised the issue of delayed tax refunds, stating that a large amount of exporters’ funds remains stuck with the FBR. This situation is forcing businesses to rely on expensive borrowing, further straining their finances.
He urged authorities to release all pending refunds immediately and implement an automated, time-bound refund system to ensure timely payments in the future.