“Pakistan needs a fair, growth-oriented taxation system — not fear-driven policies”
By Muhammad Qadeer
Q1: Mr. Shahid Nazir, how do you view the current taxation environment for businesses in Pakistan?
Shahid Nazir Chaudhry:
The current taxation regime is complex, inconsistent, and unfortunately punitive in many aspects. It discourages compliance rather than promoting it. Businesses are already struggling with inflation, currency devaluation, and rising energy costs. When on top of that, the FBR imposes arbitrary audits, complicated procedures, and ambiguous notices, it only worsens the situation. What we need is a simplified and predictable system that promotes voluntary compliance and economic growth.
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Q2: What specific reforms do you believe are necessary for simplifying the tax regime?
Shahid Nazir Chaudhry: First and foremost, we support the introduction of a simplified taxation regime, offering businesses the option to pay either 15% on net profit or 0.5% on gross revenue, with a three-year audit exemption. This would improve compliance and remove the fear of harassment.
Second, we propose a cascading sales tax model — 0% on raw materials, 5–8% on semi-finished/intermediate goods, and 18% on final consumer products. This would ensure fair value addition and reduce the cost of doing business.
Q3: Exporters have shown concerns over the shift from FTR to MTR. How do you assess this move?
Shahid Nazir Chaudhry: This decision by FBR to shift exporters from the Final Tax Regime (FTR) to the Minimum Tax Regime (MTR) is flawed and damaging. Exporters now have to undergo complex calculations under normal tax procedures and risk paying more tax beyond the 1% already paid. It’s creating financial uncertainty and unnecessary paperwork. Export should be incentivized, not penalized. We urge the government to reverse this policy.
Q4: What is your suggestion to bring traders into the formal tax net without causing unrest?
Shahid Nazir Chaudhry: We propose introducing a fixed minimum tax regime for traders — a nominal fixed amount regardless of business volume, followed by properly structured tax slabs in consultation with stakeholders. Traders aren’t averse to taxes — they just want fairness and predictability. If done right, this could bring hundreds of thousands of new taxpayers into the net without resistance.
Q5: What’s your take on the imposition of super tax based on presumed profit from turnover?
Shahid Nazir Chaudhry: This policy is utterly unjust. Calculating super tax based on turnover — especially when many businesses are suffering losses — goes against the very principle of equity in taxation. Taxing a loss-making entity as if it’s profitable is counterproductive and needs immediate review.
Q6: Refund delays are a persistent issue. How can the FBR improve this?
Shahid Nazir Chaudhry: Exporters’ liquidity is tied up due to delayed refunds, which severely affects investment cycles and competitiveness. The FASTER system is supposed to process sales tax refunds within 72 hours, but it often takes a month. We demand strict adherence to this timeline. Moreover, if refunds are delayed beyond 15 days, interest should be paid to exporters. Income tax refunds should also be automated, just like sales tax.
Q7: How do you see the treatment of amnesty declarants, particularly in light of frozen accounts and notices?
Shahid Nazir Chaudhry: It’s extremely unjust. People who declared foreign assets under state-backed amnesty schemes are now facing harassment, including frozen bank accounts and notices, even though cases are pending in the Supreme Court. This destroys trust in the government and discourages future compliance. Such actions must stop immediately.
Q8: What changes do you propose to ease the burden on withholding agents?
Shahid Nazir Chaudhry: We believe the withholding agent turnover threshold should be raised from Rs100 million to Rs250 million, in line with inflation and currency depreciation. Small and medium-sized businesses simply can’t handle the cost and responsibility of being tax collectors for the FBR.
Q9: What is your vision for sustainable economic policy?
Shahid Nazir Chaudhry: Pakistan’s economic policies must be consistent and long-term. We propose a minimum 10-year policy framework agreed upon across political parties and stakeholders. Frequent changes shake business confidence. Only long-term clarity can ensure sustainable growth, attract investment, and create jobs.
Q10: Any other concerns you’d like to highlight?
Shahid Nazir Chaudhry: Yes. We strongly oppose the 1.8% Sindh Infrastructure Development Cess (SIDC) on exporters. It cannot be claimed back and hits our export competitiveness hard. We urge the federal and provincial governments to coordinate on this and abolish it entirely.
Q11: Final message to the business community?
Shahid Nazir Chaudhry: Stay engaged, stay united. LCCI will continue to be your voice and fight for fair policies. We believe in dialogue, data-backed recommendations, and strong collaboration with the government. Together, we can put Pakistan’s economy back on track.
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