TBT DESK: Business associations have urged the government to analyse the market impact before imposing new taxes, warning that arbitrary tax hikes could hurt both businesses and consumers. They emphasised that taxation should not be influenced by external pressures from donor agencies or other entities.
During the pre-budget discussions for the 2025-26 fiscal year, various business groups raised concerns over existing tax policies and proposed several reforms. The National Board of Revenue (NBR) has been holding meetings with different trade bodies, including the Metropolitan Chamber of Commerce and Industry (MCCI), the Foreign Investors' Chamber of Commerce and Industry (FICCI), BEPZA, BEZA, and BIDA. More discussions are planned with organisations such as REHAB, the Restaurant Owners' Association, and BARVIDA.
One of the major concerns raised by businesses is the impact of tax hikes on pricing and demand. Representatives of the restaurant industry pointed out that the recent increase in minimum tax on sweets and beverages from 0.6% to 3% has led to price hikes, which in turn reduced sales. As a result, tax revenue for the government has decreased rather than increased.
Business leaders argue that such decisions should be backed by proper economic analysis to prevent unintended consequences.
Foreign investors have also called for a review of corporate tax rates to make them more competitive, while the MCCI has recommended simplifying tax administration and fully digitising the tax system. The Restaurant Owners' Association has demanded the removal of the 1% source tax on agricultural products such as rice, wheat, potatoes, fish, meat, onions, garlic, and lentils. They argue that many sellers of these products do not have Taxpayer Identification Numbers (TIN) and are not familiar with tax regulations, making the process impractical.
Meanwhile, the automobile sector has proposed lower duties on electric and hybrid vehicles to encourage environmentally friendly transport. The real estate sector is also seeking tax cuts on construction materials and a reduction in registration fees for flats and plots.
Earlier this year, the NBR increased VAT and tariffs on over 100 products, including raising restaurant VAT from 5% to 15%. However, following strong opposition from business owners, the government was forced to revert to the previous rate.
NBR Chairman Abdur Rahman Khan has acknowledged the concerns of businesses but stated that major tax reductions are unlikely in the upcoming budget. He assured that certain policy changes would be introduced to address some of the demands raised during the discussions.