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Business Recorder
2 days ago
- Business
- Business Recorder
Federal Budget termed detrimental to industry
KARACHI: Former Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and former Senior Vice President of the Karachi Chamber of Commerce and Industry (KCCI), Muhammad Hanif Lakhani has opposed the taxation of petroleum products, arguing that it would adversely affect the general public. Lakhani also expressed disappointment over the State Bank of Pakistan's decision to maintain the policy rate at a high 11%, calling it overly cautious and a negative move that is inappropriate given the declining inflation and weakening industrial competitiveness. He termed the Federal Budget 2025-26 as detrimental to the industry. He criticized the government for granting Federal Board of Revenue (FBR) officers the powers equivalent to a Station House Officer (SHO), essentially allowing them unchecked authority. Additionally, he said the imposition of an 18% tax on the IT sector is an ill-advised decision. Lakhani pointed out that the federal budget contains numerous anomalies that the Ministry of Finance must rectify. He urged the government to withdraw harsh and anti-business tax measures before the Finance Bill is passed in Parliament. He warned that granting such strict powers to the FBR in the name of increasing tax collection will make it extremely difficult to achieve the set tax targets. He also criticized the government for not reducing the interest rate, which he believes should have been brought down to 7%, especially when inflation has declined. He stated that decisions are not being made based on ground realities. Lakhani also highlighted the absence of a policy for alternative energy sources. Instead, the government imposed an 18% sales tax on solar panels, which will increase their prices. Furthermore, he opposed the imposition of taxes on e-commerce transactions, noting that unemployed youth were earning through e-commerce, and the government should either provide jobs or not take away their means of livelihood. He did, however, support the move to bring non-filers into the tax net and stated that the imposition of a 10% sales tax in FATA and PATA is a positive step that will benefit the government and curb smuggling. Copyright Business Recorder, 2025
Business Recorder
11-06-2025
- Business
- Business Recorder
Corporate tax rate issue: OICCI disappointed over limited govt progress
KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) has expressed disappointment over the government's limited progress in addressing inequitable corporate tax rate in the recent budget. It said while the marginal reduction in Super Tax rates is acknowledged, OICCI reiterates the urgent need for a comprehensive overhaul of tax structures to enhance Pakistan's competitiveness and attract foreign investment. The Chamber also notes the absence of meaningful reductions in government expenditure, which could have helped narrow the budget deficit. Fiscal discipline remains critical to ensuring macroeconomic stability, and OICCI urges the government to prioritize expenditure rationalisation in its budgetary measures. OICCI regrets the government's missed opportunity to broaden the tax base in the current budget, particularly the absence of any concrete strategy to document Pakistan's substantial Rs. 9 trillion cash-based informal economy - a critical measure for meaningful revenue enhancement and economic formalization that the Chamber has consistently advocated for OICCI welcomes several positive reforms, including simplified tax returns for salaried individuals and small businesses, the nationwide rollout of e-invoicing, and the expansion of POS systems, all measures long advocated by the Chamber. However, their success hinges on effective implementation, and OICCI stresses the need for transparency and consistency in execution. The increase in the tax exemption threshold for salaried individuals (from Rs. 0.6 million to Rs. 1.2 million) and the reduction in their tax rate (from 5 percent to 1 percent) are commendable steps that align with OICCI's recommendations but still fall short of providing impactful and necessary relief to reduce ongoing brain drain in the country. OICCI also acknowledges the government's gradual phasing out of tax exemption on FATA and PATA and the government's stricter measures against non-compliant taxpayers, including restrictions on property and vehicle purchases, asset transfers abroad, and enhanced penalties. Such actions are crucial for improving tax compliance and broadening the revenue base. Despite these advancements, the budget falls short of introducing transformative policies for the corporate sector. OICCI emphasises that gradually rationalising tax slabs and reducing the overall tax burden on businesses are essential to promoting a more investment-friendly environment. Copyright Business Recorder, 2025
Business Recorder
11-06-2025
- Business
- Business Recorder
Key economic sectors: LCCI disappointed over lack of broader relief
LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) acknowledged some positive measures in the federal budget 2025-26 but expressed disappointment over the lack of broader relief for key economic sectors. Following Finance Minister Muhammad Aurangzeb's budget speech, LCCI leaders addressed a press conference, stating that while some of their demands were met, the business community had expected more substantial measures to stimulate investment, industrial growth, small and medium enterprises (SMEs), and agriculture. LCCI President Mian Abuzar Shad, along with Senior Vice President Engineer Khalid Usman, Vice President Shahid Nazir Chaudhry, and former office-bearers including Mian Anjum Nisar, Muhammad Ali Mian, Ali Hussam Asghar, and Faheem ur Rehman Sahgal, shared their insights on the budget. A significant number of executive committee members and market association presidents also attended the conference. Mian Abuzar Shad noted that the increased defense budget was a necessary step but argued that further increments should have been made. He welcomed relief measures for the construction sector and appreciated the higher allocation for water projects, though he stressed that even greater funding was needed given current challenges. Shad highlighted that the LCCI's long-standing demand for simplified tax returns had been accepted. While the super tax was reduced, he described the cut as insignificant and called for a more substantial reduction. He praised the imposition of taxes on the Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA), a measure the LCCI had long advocated for. He pointed out that 45 government entities are being merged or abolished but emphasized the need to divest all loss-making public sector enterprises. Other positive steps included tax reductions in the real estate sector, lower duties on property transactions, the establishment of Daanish University, and measures to curb sales tax evasion. Bringing e-commerce into the tax net was also commended as a good decision. However, Shad expressed concern over under-invoicing and Afghan trade, which he claimed had cost Pakistan Rs. 25 trillion over the past 15 years. He also criticized unchecked petroleum imports for negatively impacting foreign exchange reserves. Additionally, he voiced disappointment over the absence of specific measures to support SMEs. Engineer Khalid Usman criticized the budget for lacking a clear growth strategy. He stated that the minor tax relief for salaried individuals was insufficient and called for further reductions. He also argued that taxing petroleum products would discourage the documented economy. Copyright Business Recorder, 2025
Express Tribune
11-06-2025
- Business
- Express Tribune
Subsidies trimmed by Rs180b to Rs1.18tr
The Power Division has urged Nepra to align KE's tariff structure with national standards to ensure fairness, transparency and affordability. photo: file Listen to article The government has slashed the allocation for subsidies to Rs1.18 trillion for the upcoming fiscal year 2025-26, of which Rs1.036 trillion will go to the power sector. The government had earlier allocated Rs1.36 trillion in subsidies for the power sector and other commodities, which went up to Rs1.378 trillion for the ongoing financial year, according to revised estimates. With the subsidy allocation for FY26, the government expects to provide some relief for consumers of electricity, petroleum, food, urea, wheat subsidy, and mark-up for low-cost housing. However, it remains uncertain whether the government will be able to stay within the subsidy ceiling or exceed the target, as happened in the outgoing year. According to the Budget Book released on Tuesday, the subsidy bill has been estimated at Rs1.186 trillion for the next fiscal year, a reduction compared to the current financial year's allocation. Out of the total subsidies, a major chunk worth Rs1.03 trillion will go to the power sector compared to Rs1.19 trillion for the ongoing financial year. For the next fiscal year, the government has earmarked Rs249 billion — down from Rs276 billion — for payments for Inter-Disco tariff differential. An amount of Rs40 billion has been set aside for the merged districts of Khyber-Pakhtunkhwa (K-P including Federally Administered Tribal Areas (FATA) subsidy), compared to Rs65 billion allocated during the outgoing fiscal year for FATA subsidy arrears. The government has also set aside Rs74 billion for the next financial year — down from Rs108 billion — for the tariff differential for Azad Jammu and Kashmir (AJK). An amount of Rs48 billion has been earmarked for the Pakistan Energy Revolving Fund (PERA), the same as the ongoing financial year. The subsidy allocation to cover K-Electric's (KE) tariff differential has been slashed to Rs125 billion for the next fiscal year, compared to Rs171 billion allocated during the outgoing financial year. However, the government has increased the allocation to Rs1 billion for agriculture tubewells in Balochistan for KE consumers, up from Rs500 million during the outgoing year. Of the total, the government has allocated Rs95 billion for payments to Independent Power Producers (IPPs) for the next fiscal year. No allocation was originally made for IPPs in the outgoing year, but later Rs115 billion was provided in the revised budget estimates. The government has also allocated a Rs1.2 billion subsidy for petroleum for the next fiscal year, down from Rs18.4 billion. An amount of Rs1.2 billion has been earmarked to meet the shortfall in guaranteed throughput of Pakistan Electric Power Company (PEPCO), down from Rs2.4 billion this year. An allocation of Rs6 billion was also made during the outgoing fiscal year to cover the shortfall of Asia Petroleum; however, no such allocation has been made for the next year. For the ongoing fiscal year, the government had allocated Rs10 billion for domestic consumers through Sui Northern Gas Pipelines Limited (SNGPL), but no allocation has been made for this purpose in FY26. The subsidy cushion for the Pakistan Agricultural Storage and Services Corporation (PASSCO) has been increased to Rs20 billion from Rs12 billion for the current year. Of this, Rs14 billion will go for wheat reserve stocks and Rs6 billion for the cost differential in the sale of wheat. The government has slashed the subsidy allocation to Rs24 billion for the next fiscal year from Rs68 billion for industries and production. Of this, Rs9 billion will go as incentives for electric vehicles (EVs), and Rs15 billion to clear Utility Stores Corporation of Pakistan (USCP) sugar subsidy arrears. No allocation has been made for the Ramazan Package or USCP PM Package. However, the government has increased the allocation to Rs104 billion for 'other subsidies' against Rs75 billion allocated earlier, which rose to Rs90 billion in revised estimates this year. Of this, Rs20 billion will go for wheat subsidies in Gilgit-Baltistan (G-B), and Rs15 billion for imported urea fertiliser. The Naya Pakistan Housing Authority will get Rs1 billion, with an additional Rs7 billion for the mark-up subsidy and risk-sharing scheme for, farm mechanisation, under the Kissan Package. The government will release Rs1 billion for the refinance and credit guarantee scheme (SME Asaan Finance), while Rs5.4 billion has been allocated for SME sector financing enhancement. An allocation of Rs30 billion — up from Rs13 billion — has been made for the mark-up subsidy supporting the phase-out of SBP refinancing facilities. Further allocations include Rs3 billion for 5km radius gas schemes, Rs5 billion for the EFS Enhanced Plan-Exim and Related Scheme, Rs5 billion for housing sector subsidies, and Rs7.3 billion for the Metro Bus subsidy.
Business Recorder
10-06-2025
- Business
- Business Recorder
Missed Opportunity: OICCI slams Budget FY26 for ignoring informal economy
The Overseas Investors Chamber of Commerce and Industry (OICCI), representing over 200 of the largest foreign investors in Pakistan, has expressed disappointment over the government's limited progress in addressing the 'inequitable corporate tax rate' in the recent budget. 'While the marginal reduction in Super Tax rates is acknowledged, OICCI reiterates the urgent need for a comprehensive overhaul of tax structures to enhance Pakistan's competitiveness and attract foreign investment,' the chamber said in a statement on Tuesday. Finance Minister Muhammad Aurangzeb announced Pakistan's federal budget 2025-26 'for a competitive economy' on Tuesday, targeting a modest 4.2% growth for the coming fiscal year, compared to 2.7% expected in the outgoing FY25. OICCI's budget proposals — balancing reform with reality The chamber also noted the 'absence of meaningful reductions' in government expenditure, which could have helped narrow the budget deficit. The chamber urged the government to prioritise expenditure rationalisation in its budgetary measures. 'OICCI regrets the government's missed opportunity to broaden the tax base in the current budget, particularly the absence of any concrete strategy to document Pakistan's substantial Rs9 trillion cash-based informal economy - a critical measure for meaningful revenue enhancement and economic formalisation that the chamber has consistently advocated for,' it added. On the other hand, OICCI acknowledged positive reforms, including simplified tax returns for salaried individuals and small businesses, the nationwide rollout of e-invoicing, and the expansion of POS systems. 'However, their success hinges on effective implementation, and OICCI stresses the need for transparency and consistency in execution,' it said. OICCI said that the increase in the tax exemption threshold for salaried individuals, from Rs0.6 million to Rs1.2 million, and the reduction in their tax rate, from 5% to 1%, 'are commendable steps that align with OICCI's recommendations but still fall short of providing impactful and necessary relief to reduce ongoing brain drain in the country'. The chamber noted that the government's gradual phasing out of tax exemption on FATA and PATA and the government's stricter measures against non-compliant taxpayers, including restrictions on property and vehicle purchases, asset transfers abroad, and enhanced penalties, are crucial for improving tax compliance and broadening the revenue base. 'Despite these advancements, the budget falls short of introducing transformative policies for the corporate sector,' it said. OICCI emphasised that gradually rationalising tax slabs and reducing the overall tax burden on businesses are essential to promoting a more investment-friendly environment.
