Business council urges tougher taxation on non-filers through electricity bills to expand Pakistan’s tax base
The Pakistan Business Council (PBC) has proposed a sharp increase in withholding tax rates on electricity consumers who are not filing income tax returns in its budget proposals for 2026-27.
The council, which represents multinational and foreign companies operating in Pakistan, recommended aggressive tax measures aimed at forcing non-filers into the documented economy and broadening the country’s tax net.
Under the proposals submitted for the upcoming federal budget, the PBC suggested increasing withholding income tax on electricity bills of non-filer industrial consumers without a Sales Tax Registration Number (STRN) to 20 percent from the current 5 percent.
Similarly, the business body proposed raising withholding tax on electricity bills of non-filer commercial consumers having no STRN to 20 percent from the existing 12 percent.
For domestic electricity consumers, the council recommended a steep increase in withholding tax to 30 percent from the current 7.5 percent for monthly bills exceeding Rs100,000.
The PBC emphasized that stronger financial penalties are necessary to encourage tax compliance and discourage undocumented economic activity.
“Creates a real compliance incentive. Forces non-filers to bear a meaningfully higher cost of remaining outside the tax net,” the council stated in its recommendations.
Tax experts believe the proposed measures, if accepted by the government, could significantly increase pressure on high-value electricity consumers to register with the tax authorities and file annual income tax returns.
However, analysts also warned that a substantial increase in withholding taxes may add to the financial burden on businesses and households already facing elevated energy costs and inflationary pressures.
The proposals come as the government prepares the federal budget for fiscal year 2026-27 amid ongoing efforts to enhance revenue collection and meet fiscal targets.
