FPCCI criticises budget powers for tax officials, seeks policy revisions

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has strongly opposed several provisions in the federal budget for FY2025-26, warning that excessive powers granted to tax officials could undermine investor confidence and hamper industrial activity.

President of FPCCI Atif Ikram Sheikh said the organisation rejects the “excessive, overly subjective and harassment-prone authorities” granted to tax officials under the proposed budget. He specifically criticised provisions that allow tax authorities to withdraw funds from business accounts or raid premises without prior notice. “These harsh measures must be rolled back before the budget is passed to restore business community confidence,” Sheikh said in a statement. “The tax target can only be achieved if exporters and industrialists are consulted through a structured dialogue.”

He also noted the absence of concrete steps to support Prime Minister Shehbaz Sharif’s stated goal of achieving export-led growth.Sheikh warned that increased human interaction between tax collectors and businesses undermines fairness and transparency. “Globally, it is well established that the more a tax official is allowed to intervene, the greater the likelihood of abuse and unpredictability,” he said.

FPCCI Senior Vice President Saquib Fayyaz Magoon called for the restoration of the fixed tax regime (FTR) for exporters, saying long-term clarity is essential to encourage both domestic and foreign investment.

Magoon also urged the government to expand the scope of the Export Facilitation Scheme (EFS) to include local manufacturers. “Excluding them risks supply chain disruptions and will reduce competitiveness in regional and global markets,” he said. He further expressed concern that key FPCCI recommendations -- such as incentive packages for the IT & ITeS, mining, and fishing sectors -- were ignored in the budget despite their high-growth potential.

FPCCI Vice President Asif Sakhi said tax officials should move away from viewing businesses as evaders. “We need a shift towards a more facilitative, respectful approach if we want voluntary compliance,” he said.

FPCCI VP Aman Paracha proposed a high-level fact-finding committee to determine why the Federal Board of Revenue (FBR) failed to meet its FY25 collection target.Nasir Khan, another FPCCI vice president, warned that many entrepreneurs have already moved operations abroad. “The remaining ones are barely keeping factories open without incurring losses,” he said.

The FPCCI also criticised the 10-year restriction -- or tax year 2035 limit -- imposed on developers in special economic zones (SEZs). The group argued the window is too short to accommodate the time required to establish operations and begin revenue generation.“To truly attract FDI and serious long-term investors, this period should be extended to at least 20 years -- ideally 30,” the FPCCI said.