ISLAMABAD: Pakistan’s business leaders on Monday pressed Prime Minister Shehbaz Sharif for tax and energy relief ahead of the announcement of the next fiscal year’s federal budget, arguing that high production costs, complex tax rules and elevated energy tariffs are undermining investment, exports and industrial competitiveness.
The demands were presented during a consultative meeting between Sharif and representatives of chambers of commerce from across the country as the government finalizes its budget for the fiscal year beginning July 1.
The budget is being prepared under the constraints of a $7 billion International Monetary Fund (IMF) program approved in September 2024, which helped stabilize Pakistan’s economy after a balance-of-payments crisis but requires the government to raise revenues, broaden the tax base and maintain fiscal discipline. The challenge for policymakers is balancing those commitments against growing calls from businesses for relief.
In a statement issued after the meeting, Sharif announced a series of measures aimed at improving the business environment, including directing the Federal Board of Revenue (FBR) to clear all pending tax refund cases by June 15.
“Industrial development and increasing production will be supported through further measures in the upcoming budget,” the prime minister said.
Sharif also reiterated the government’s commitment to export-led growth, small and medium-sized enterprises and industrial expansion, while directing that the headquarters of Pakistan Revenue Automation Limited (PRAL), which provides information technology services to the tax authority, be moved to Karachi following requests from the business community.
The prime minister said banks’ decision to keep the Export Refinance Scheme rate at 4.5 percent until June 2027 despite a recent increase in the policy interest rate was “commendable,” describing exports as central to Pakistan’s economic strategy.
“Export-led economic growth is our mission and we will ensure the achievement of this mission through collective efforts,” Sharif said.
Business leaders, however, argued that more substantial relief would be needed in the budget to revive investment and improve competitiveness.
Speaking to Arab News after the meeting with Sharif, Karachi Chamber of Commerce and Industry President Muhammad Rehan Hanif said industrialists had urged the government to abolish the super tax, lower electricity and gas costs and simplify tax procedures.
“The Prime Minister took note of our proposals, and some immediate decisions were made, while others will be reflected in the budget,” Hanif said.
The super tax, originally introduced as an additional levy on high-income individuals and profitable companies, has become one of the business community’s biggest concerns. Industry representatives argue that when combined with other taxes, duties and levies, the overall burden on some sectors has become excessive.
Another business leader who attended the meeting but declined to be identified said chamber representatives told Sharif that some industries were paying cumulative taxes of up to 60 percent of income, leaving little room for expansion, modernization or new investment.
“The Prime Minister took note of our proposal,” the representative said, referring to calls for the tax’s abolition.
Industrialists also urged the government to reduce energy costs, which manufacturers say are among the highest in the region and have weakened Pakistan’s ability to compete in international markets.
“We proposed that industry should be supplied gas and electricity on cost rates and no profit should be charged by the distribution companies to make Pakistan exports competitive in the global market,” Hanif said.
Business groups further called for a return to the Final Tax Regime for exporters. Under that system, taxes are deducted at source through a simplified mechanism. Industry representatives argue that the National Tax Regime introduced in 2024 requires significantly more documentation and compliance, increasing costs for exporters.
Representatives of the Lahore Chamber of Commerce and Industry expanded the list of demands, urging the government to base the upcoming budget on an export-led growth strategy and reduce what they described as the rising cost of doing business.
LCCI President Faheem Ur Rehman Saigol called for the abolition of the Punjab Infrastructure Development Cess, saying the levy had increased costs for manufacturers and export-oriented industries. According to the chamber, Sharif told participants the issue was already under consideration.
The Lahore chamber also called for greater policy stability, warning that frequent regulatory changes and tax notifications create uncertainty for investors and increase compliance costs. It urged the government to reduce energy tariffs, financing costs and other burdens on industry, while creating a more supportive environment for manufacturing and exports.
Another issue raised during the meeting was the future of tax exemptions available to industries operating in Pakistan’s former Federally Administered Tribal Areas and Provincially Administered Tribal Areas. Industrialists from other regions argue the incentives distort competition and are often misused.
“The Prime Minister assured us that the exemption will gradually be phased out,” Hanif said.
