The Federal Board of Revenue (FBR) has signaled that businesses could see further tax relief, including a possible complete withdrawal of super tax and a reduction in sales tax burden, as companies warn that high costs and tax pressures are hurting investment and industrial activity.
The signal came during a meeting of a Senate Finance Committee subcommittee, where business representatives raised concerns over high taxation, expensive financing, rising input costs, and what they described as harassment by FBR officials.
Industries Warn of Capacity Cuts and Relocation Risk
Business representatives told the subcommittee that several industries are currently operating at only 40 to 45 percent capacity, and warned that more companies could move their operations out of Pakistan if the business environment doesn’t improve. They also pointed to the departure of several multinational companies from the country as evidence of the strain.
FBR Says Super Tax and Sales Tax Reductions Under Review
Hamid Ateeq Sarwar, a member of the FBR, said the government is considering further reductions in the overall tax burden, with super tax among the areas currently under review alongside measures to lower sales tax costs for businesses.
Sarwar said the government has already provided roughly Rs. 361 billion in tax relief since 2025 on the Prime Minister’s directions, including relief measures for salaried individuals, a reduction in super tax, and its complete elimination for exporters. He added that the government intends to keep rationalizing the tax burden while balancing revenue needs against the country’s import requirements and fiscal constraints.
To address sector-specific concerns, exporter facilitation committees have been set up in Karachi, Lahore, Sialkot, Faisalabad, Islamabad, and Multan.
Businesses Push for Lower Withholding Taxes and a Broader Tax Base
Business representatives called for lower advance and withholding taxes, simpler customs duty procedures, and easier audit processes. Rather than increasing pressure on existing taxpayers, they urged the government to widen the tax base by bringing more businesses and sectors into the formal tax system.
Representatives also raised concerns about frequent notices, audits, and enforcement actions from FBR field formations, arguing that these practices are creating uncertainty and driving up the cost of doing business.
Committee Warns Excessive Taxation Could Backfire
The subcommittee said excessive taxation could ultimately undermine the government’s own revenue goals by discouraging investment and shrinking the formal tax base. Convener Muhammad Talha Mahmood called for a more business-friendly tax system and greater transparency in tax administration.
