Business community decries ‘draconian’ tax ordinance

KARACHI: The business community has raised serious concerns over the Tax Laws (Amendment) Ordinance, 2025, saying that the ordinance -- issued without consultation with stakeholders and in the absence of parliamentary debate -- poses severe implications for both the business sector and rule of law.

President of the Karachi Chamber of Commerce and Industry (KCCI) Muhammad Jawed Bilwani objected to the introduction of Sections 138(3A) and 140(6A) of the Income Tax Ordinance, which override judgments of superior courts and render disputed tax liabilities immediately recoverable, even where relief has been granted by judicial forums. This, he said, directly undermines the sanctity of court decisions, erodes taxpayers’ constitutional right to due process and promotes a coercive tax regime.

Furthermore, he said the insertion of Section 175C, allowing inland revenue officers to be posted at business premises under vague conditions, breaches privacy and creates an atmosphere of harassment and intimidation. The power to station officials within private enterprises, without transparent criteria or judicial oversight, threatens operational independence and sends a chilling message to investors and entrepreneurs, he added.

He also criticised amendments to the Federal Excise Act, 2005, which grant extensive powers for enforcement and allow the deputation of federal or provincial officers for monitoring purposes, exacerbating concerns about intrusion. The inclusion of loosely defined offences, such as “affixing counterfeit tax stamps”, leaves ample room for arbitrary interpretation and potential misuse.

The KCCI president demanded the immediate withdrawal of the ordinance and called upon the government to convene a parliamentary debate, involving elected representatives and industry stakeholders. “We reiterate our commitment to fair taxation and documentation of the economy but reject any legislative measure that bypasses due process and threatens legitimate businesses under the pretext of enforcement.”

He urged the president and the Ministry of Law and Justice to uphold constitutional principles and engage in dialogue, rather than promulgating authoritarian ordinances that risk further damaging Pakistan’s already fragile business climate.

The Pakistan Chemicals & Dyes Merchants Association (PCDMA) has also expressed deep concern over the ordinance, describing it as harsh and unjust.PCDMA Chairman Salim Valimuhammad and Adviser to the Subcommittee for Sales Tax and Income Tax Danish Saleem highlighted that the ordinance was issued without consultation with stakeholders and without parliamentary debate on this critical legislation. This, they said, has shaken business confidence and undermined the rule of law.

Valimuhammad raised particular concerns over Sections 138(3A) and 140(6A) of the Income Tax Ordinance, which, he said, render judicial relief ineffective by making disputed tax liabilities immediately recoverable, even where courts have granted relief. This, he warned, undermines taxpayers’ right to fair adjudication.

In a separate statement, Mian Zahid Hussain, chairman of National Business Group Pakistan, said that Pakistan’s aggressive tax measures risk destabilising the economy and discouraging investment.

Hussain, who also leads the Pakistan Businessmen and Intellectuals Forum, criticised the new Tax Law Amendment Ordinance 2025, which grants sweeping powers to the Federal Board of Revenue (FBR), including authority to withdraw funds from taxpayers’ bank accounts and deploy staff to monitor factories. He warned these steps could fuel corruption and hurt business confidence.He called for deeper consultation with the business community to restore trust and said only meaningful reforms would boost revenues and economic stability.