Business leaders up in arms against new tax law

KARACHI: Business leaders have harshly criticised the Tax Ordinance Amendments 2025, warning that misguided policies from within the government pose a greater threat to the country’s economic stability than external adversaries.

“We request Army Chief General Asim Munir to keep a vigilant eye on the country’s policymakers who are bent on causing irreparable losses to the country,” said Nasir Khan, vice president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), during a press conference on the amendments held at the Federation House on Saturday. He was accompanied by other FPCCI leaders.

Nasir Khan recalled that the army chief had assured the business community of safeguarding investments in Pakistan. “The enemy is not only on the border — it is also formulating destructive policies that are forcing investors and citizens to flee the country,” he added.

FPCCI Senior Vice President Saquib Fayyaz Magoon expressed concern over the sweeping powers granted to tax officials under the new ordinance, adding that under the amendments, a Federal Board of Revenue (FBR) officer can penalise a taxpayer without due process, depriving the individual of the right to appeal.

He said FBR officials have been given authority to recover amounts without issuing prior notice and to monitor industrial operations directly — moves that, he warned, would open floodgates to corruption.

Mr Magoon questioned whether FBR officials had been granted a “certificate of honesty” to justify such unchecked powers. He criticised SRO55 and SRO69 relating to sales tax, pointing out calculation errors that are causing delays in the filing of sales tax returns. Additionally, he noted that in SRO55, the measurement units have been changed to kilograms, which would create operational complications for businesses.

He also pointed to a contradiction in FBR’s approach: while a faceless system with no human intervention has been introduced for goods clearance, the Inland Revenue continues to create hurdles for taxpayers.

Mr Magoon accused the FBR of pursuing its own policy in contradiction to the Special Investment Facilitation Council (SIFC), which is working to attract investors. “While SIFC aims to create investor confidence, the FBR is actively harassing them,” he stated.

He reiterated national support for the prime minister’s vision to achieve $100 billion in exports, but said the FBR’s actions directly conflict with this goal.

Mr Magoon also hinted at a possible new ordinance that would abolish the captive power option — a move he urged the government to reconsider. He pointed out that industries have invested billions in captive power and called for dialogue with stakeholders before taking such a drastic step.

Meanwhile, Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Jawed Bilwani termed the Tax Ordinance Amendments 2025 regressive and anti-business, warning that they pose a serious threat to Pakistan’s already fragile economy.

He said the ordinance directly contradicts the government’s stated objective of providing a business-friendly environment. Mr Bilwani criticised the lack of consultation, questioning why such critical changes were made without parliamentary debate or industry input.

He also condemned the excessive advance tax demands based on presumed income, calling it a flawed approach that ignores business cycles and seasonal fluctuations. He warned that this would hit small and medium enterprises and export-oriented units hardest, potentially paralysing their working capital and pushing many into default or closure.

He noted that the ordinance criminalises procedural non-compliance, adding that even minor clerical errors or delays caused by technical issues could now result in severe penalties, heavy fines, or even criminal prosecution. He emphasised that the amendments do nothing to broaden the tax base.

“Once again, the burden is being placed on those already in the system, while vast informal sectors, including retail, real estate and agriculture, remain untouched.”

He also criticised the government’s decision to promulgate the ordinance via executive order, bypassing the parliamentary process.

SITE Association of Industry (SAI) Chairman Ahmed Azeem Alvi urged Prime Minister Shehbaz Sharif to withdraw the ordinance, warning that its provisions undermine the documented economy, discourage compliance, and risk reversing the progress made in broadening the tax base.

He warned that the ordinance would damage investor confidence at a time when Pakistan urgently needs economic stability.

Published in Dawn, May 18th, 2025