Taxation Reforms: FPCCI & FBR to Join Forces Atif Ikram Sheikh, President FPCCI

Karachi: Mr. Atif Ikram Sheikh, President FPCCI, has apprised that, in a milestone development,
FPCCI and FBR have agreed to consult, collaborate and synergize on a comprehensive taxation
reforms agenda. This is the only way forward for the economy of Pakistan as revenue generation
provides the very basis of any country’s fiscal policies and development plan – nonetheless, the
same needs to be done in a consultative, inclusive and pragmatic manner, he added.

It is pertinent to note that Mr. Rashid Mahmood Langrial, Chairman of the Federal Board of
Revenue (FBR), paid a detailed visit to the Head Office of FPCCI – the apex body – at the
Federation House, Karachi. He was accompanied by c-level FBR team and senior officials from
various FBR departments; who collectively responded to questions from senior trade, industry
and media representatives.

Mr. Atif Ikram Sheikh reiterated his earlier stance that the two guiding principles of any taxation
reforms in Pakistan should be broadening of the tax-base and simplification of the taxation
system; coupled with rationalization of tax rates, facilitation and incentivizing taxation culture.

Mr. Saquib Fayyaz Magoon, SVP FPCCI, presented the principled apprehensions and demands
of FPCCI. He observed that FBR’s revenue target is PKR. 12.97 trillion – representing a 40
percent YoY increase – while the economy is growing at only 2 percent. This is huge cause of
concern for the business community; and, may result in new taxes, mini budgets and taxing the
already taxed even further

Mr. Saquib Fyyaz Magoon maintained the Finance Bill has significantly reduced the business
community’s confidence in the government policies due to the abrupt withdrawal of 1 percent
full and final liability for exporters; and, sales tax exemption on local supplies to registered
exporters authorized under the Export Finance Scheme (EFS).

SVP FPCCI highlighted that Tajir Dost Scheme (TDS) was also implemented without
consultation; and, as a matter of fact, it has been revealed that TDS has missed its revenue
collection target by 99 percent.

Mr. Magoon stressed that FPCCI has raised issue of SRO. 350 (I)/2024 repeatedly; and, despite
being amended two times over, it remains problematic – just because it was issued without
consulting the stakeholders. FPCCI strongly advocates to effectively revive and expand Alternate
Dispute Resolution Committee (ADRCs) under customs, sales tax, federal excise duties and
income tax heads, he added.

Mr. Saquib Fayyaz Magoon proposed that Export Finance Scheme (EFS) need to be simplified
as it takes 3 – 4 months to complete the process due to complex procedures, issue of duplicate
documentation and system glitches. Additionally, it lacks provisional quotas; transitioning
between business structures and multi-product output from single inputs.

Mr. Magoon warned that the inclusion of EPZs in regular tax scheme will result in major losses
and resentment among the investors. Additionally, local industry has been excluded from EFS as
well; whereas exporters have been unfairly excluded from final tax regime (FTR). FPCCI once
again demands resolution of these discrepancies, he added.

Mr. Khurram Ejaz, member of PM’s committee on cross-cutting in ports and advisor to President
FPCCI on FBR affairs, questioned that why Pakistani ports and terminals cannot operate 24 / 7
examination, delivery and handling like rest of the world. He demanded that FBR’s LIVE project
should be implemented to resolve issues of customs appraisement; modernized labs should be
installed and dwell times should be reduced.

Mr. Rashid Mahmood Langrial, Chairman FBR, agreed that tax rates should be curtailed to
reduce tax burden and enhance compliance; however, it is not possible in the current
circumstances. He added that last 2 – 3 years have been very painful for the economy; but,
economic indicators have started to show improvement.

FBR Chairman also expressed optimism that interest rate may be further reduced by 1.5 – 2.0
percent soon; and, advocated for no more than 3 – 4 percent premium in policy rate as compared
to inflation numbers. He opined that the country has no other breathing windows in sight and
promoting tax culture is the only viable solution.

Mr. Langrial stated that not even the top 5 percent wealthiest population is filing taxes; and,
FPCCI’s demand is legitimate that tax evaders should be targeted instead of those already paying
taxes for the past many decades. He also suggested that the model to pay back loans through
borrowing even more money is no longer sustainable for the country

On demand of FPCCI, he advised FBR officials to minimize checking cargo within the limits of
Karachi city as a pilot study; and, only inspect or stop on concrete intelligence-based information
for large consignments. He also advised to appoint a grade-19 FBR officer in his staff to be the
focal person for day-to-day issues raised by trade bodies – who should be responsible to inform
him of any pressing concerns or complains within 24 hours.