Small Traders Get Simplified Tax Scheme

Pakistan’s government says it is reshaping the tax system to ease pressure on businesses, exporters, salaried workers and small traders while making the Federal Board of Revenue more transparent and technology-driven.

Minister of State for Finance Bilal Azhar Kiyani told the Lahore Chamber of Commerce and Industry that super tax had been abolished for exporters and businesses with annual income between Rs150 million and Rs500 million. For companies earning more than Rs500 million, the rate would fall from 10% to 8%.

Exporters will also see the deduction on export proceeds reduced from 2% to 1.25%. Kiyani said the previous 2% deduction combined a 1% advance income tax with a 1% minimum tax. Dedicated FBR facilitation structures have been established in Karachi, Faisalabad, Lahore and Sialkot, with Multan, Hyderabad and other areas being added to the system.

The government is also introducing centralised and faceless audit and assessment mechanisms. Kiyani said the model would reduce individual discretion, harassment and the possibility of collusion. He said chambers had been invited to submit proposals directly before the budget so practical recommendations could be considered.

LCCI President Faheemur Rehman Saigol welcomed the measures but said taxation, business costs and energy tariffs remained major challenges. He cited remittances of $41.6 billion and Moody’s upgrade of Pakistan’s credit rating from Caa1 to B3 as encouraging developments, while highlighting high electricity prices, enforcement actions by several agencies and the conversion of agricultural land into housing schemes.

Saigol also questioned a proposed relocation of 8,000 to 10,000 industries, saying Pakistan lacked the industrial zones and infrastructure to move even a fraction of them quickly. Kiyani said the private sector needed a meaningful role in policymaking. He also said the board of the Export Development Fund had been reconstituted, with an exporter appointed as chairman, although the supplied report ends before giving further details.