ADB Warns Pakistan to Reform Telecom Sector or Risk Falling Behind in Global Digital Race

Islamabad – July 14, 2025:
The Asian Development Bank (ADB) has sounded the alarm on Pakistan’s faltering digital progress, calling for urgent policy reforms to revive the country’s telecom and digital infrastructure. In a newly released report titled “Pakistan’s Digital Ecosystem,” ADB highlights excessive taxation, flawed spectrum pricing, and policy instability as major barriers to digital growth.

The report urges the government to rationalize taxes on digital infrastructure, fix spectrum pricing for at least 10 years, and remove dollar-based indexation to shield telecom operators from currency shocks. It also stresses that inefficient spectrum auctions and a lack of investor confidence could delay Pakistan’s 5G rollout.

ADB recommends provinces take the lead in driving digital services by subscribing to broadband for schools and hospitals, which would push network expansion into underserved areas. The report also calls for overhauling the Universal Service Fund (USF), supporting smartphone affordability, and encouraging local mobile manufacturing to reduce dependency on imports.

Crucially, ADB notes the absence of a unified industry voice in telecom policymaking and urges structured dialogue between the government and private sector to shape a more inclusive and competitive digital future.

“This is a make-or-break moment for Pakistan’s digital economy,” the report concludes, warning that without swift reforms, the country risks deepening the digital divide and missing out on global 5G opportunities.

FBR Now Requires Actual Property Market Value in Tax Returns 2025

Islamabad – July 14, 2025:
The Federal Board of Revenue (FBR) has introduced a new requirement for all taxpayers to declare the actual market value of properties in their income tax returns for the tax year 2025. The directive applies to all immovable properties—land or buildings—whether owned, purchased, or sold.

Effective from July 1, 2025, this new rule was outlined through SRO 1213(I)/2025, issued on July 7, 2025. The FBR’s updated electronic return form now includes a dedicated section requiring taxpayers to manually input details of each property, including its current market price, regardless of any auto-filled data already present in the system.

Taxpayers must also reconfirm all previously declared properties and re-enter their details manually, ensuring accuracy and completeness of information. The move is aimed at curbing the widespread issue of undervaluation in real estate transactions and ensuring transparency in asset disclosures.

FBR officials have stated that failure to comply with this requirement may result in penalties, audit flags, or further legal scrutiny. The initiative is part of FBR’s broader strategy to tighten documentation and expand the tax base through improved property record verification.

Tax professionals are advising individuals and businesses to reassess their property records and seek updated valuations before filing their returns to avoid discrepancies.

Published: July 5, 2025

The Federal Board of Revenue (FBR) has officially clarified that overseas Pakistanis can avail the lower “filer” tax rates on the purchase and sale of immovable property—even if they are non-filers—provided they meet specific eligibility criteria.

In a newly released set of Frequently Asked Questions (FAQs), the FBR addressed confusion around applicable tax rates for non-resident Pakistanis conducting property transactions in the country. The move is expected to bring relief to overseas Pakistanis and simplify compliance with real estate tax obligations.

Eligibility for Filer Rate

According to the FBR, individuals who:

• Hold a valid Pakistan Origin Card (POC) or National Identity Card for Overseas Pakistanis (NICOP), and

• Are classified as non-resident under Pakistani tax law (i.e., they spend fewer than 183 days in Pakistan during a financial year),

will be eligible to pay the lower “filer” rate of advance income tax on real estate transactions—even if they are not listed on the Active Taxpayers List (ATL).

This applies to taxes levied under:

• Section 236C (advance tax on sale of property)

• Section 236K (advance tax on purchase of property)

These taxes are normally charged at higher rates for non-filers.

How to Avail Filer Rate as an Overseas Pakistani

To benefit from this exemption, overseas Pakistanis must complete the following steps through the FBR online portal:

1. Visit the “Overseas Pakistanis” section on the FBR portal.

2. Register and generate a Payment Slip ID (PSID) specific to the property transaction.

3. Upload required supporting documents (POC or NICOP, proof of non-residency, etc.).

4. Submit the application to the relevant Commissioner Inland Revenue for approval.

5. Once verified and approved, the portal system will enable payment at filer rates.

The FBR emphasized that only approved users will be able to pay tax at the reduced rate. All others will be automatically assessed under the standard non-filer regime.

Purpose of the Clarification

This clarification is intended to remove ambiguity and facilitate non-resident Pakistanis investing in real estate. It ensures that those with a verifiable overseas status are not penalized by higher non-filer tax rates, thereby encouraging legal compliance and property market participation from the overseas diaspora.

Commercial Property Rent in Punjab Becomes Costlier After 16% Sales Tax Imposed

KARACHI – July 5, 2025

Renting commercial property in Punjab has become significantly more expensive following the government’s implementation of a 16% sales tax on all non-residential leases, effective July 1, 2025.

The move is part of the Punjab Finance Act 2025, which marks a significant shift in the province’s taxation framework. In a major policy change, the Punjab government has adopted a “tax by default” approach, where all services are deemed taxable unless specifically exempted in the First Schedule of the Act.

Since commercial leasing is not listed among the exemptions, it now falls squarely under the taxable services category.

What’s Taxed and What’s Not?

Under the revised rules:

• 16% sales tax will apply to all rentals of commercial, non-residential properties, including offices, shops, and retail spaces.

• Residential properties for personal use remain exempt from sales tax.

• The Punjab Revenue Authority (PRA) will be responsible for overseeing implementation, enforcement, and collection.

This change broadens the tax base significantly compared to prior years, where only a limited set of services were subject to sales tax.

Impact on Property Owners and Tenants

The new tax will directly impact:

• Real estate developers

• Commercial building owners

• Tenants of office, retail, and warehouse spaces

All fixed-fee rental invoices must now include a 16% sales tax, and failure to comply may result in penalties and legal action under PRA regulations.

Several real estate firms and commercial landlords have already begun issuing notices to tenants, informing them about the new tax obligations and updating their billing procedures accordingly.

Compliance Advisory for Businesses

Tax experts and property consultants are advising businesses to:

• Review all lease agreements and update invoicing to reflect the added tax

• Ensure registration with PRA, if required, and file returns accordingly

• Seek legal or tax advice to avoid non-compliance and potential fines

With the real estate sector under increased scrutiny, compliance with tax laws is now more important than ever, especially as provincial and federal authorities look to maximize revenue collection in a tightening fiscal environment.

KCCI Backs Nationwide Strike Over ‘Draconian’ Tax Laws, Demands Full Repeal of Sections 37A & 37B

Karachi — July 4, 2025

The Karachi Chamber of Commerce and Industry (KCCI) has thrown its full support behind a complete nationwide strike if all major chambers unite against the controversial Sections 37A and 37B of the Sales Tax Act, calling them “draconian” and a severe threat to Pakistan’s business climate.

Addressing a press conference at KCCI, President Jawed Bilwani condemned the newly introduced tax provisions, stating that they endanger investor confidence and impose unjustified burdens on already tax-compliant businesses.

“Posting banners and holding press conferences are just the beginning. Protests will intensify unless Sections 37A and 37B are completely repealed,” said Bilwani, flanked by representatives of all seven industrial zones of Karachi.

SOPs Rejected — Only Repeal Acceptable

Bilwani revealed that the Federal Board of Revenue (FBR) had reached out to initiate discussions on developing Standard Operating Procedures (SOPs) for implementing Section 37A. However, he firmly rejected the offer, reiterating that the entire business community unanimously demands repeal — not regulation.

“We will not participate in SOP formulation. The business community’s stance is crystal clear: Section 37A must go,” he declared.

The timeline for the strike, he added, would be decided after consultations with other chambers, trade bodies, and key stakeholders.

Arrest Powers Fuel Harassment, Investor Concerns

The most contentious aspect of the new law is the expanded arrest authority granted to FBR officials, which business leaders warn could be easily abused, leading to harassment, extortion, and a chilling effect on investment.

“Section 37A is incompatible with conducting business in Pakistan. It undermines our status as a business-friendly country,” Bilwani said, noting that complaints from distressed business owners are rising.

He further criticized the government for targeting those already in the tax net, while failing to tackle the core issue — fake and flying invoices.

“Only 40% of Pakistan’s economy is documented, and perhaps 2% of that is engaged in malpractice. Yet 98% of honest, tax-paying businesses are now under threat,” he argued.

Bilwani also highlighted the FBR’s weak enforcement record, noting that in most court rulings involving such arrests or audits, decisions favored taxpayers, not the tax authority.

Structural Flaws in Tax System

According to KCCI, at least 30 critical anomalies exist in the current tax framework, with five to six so severe that they have made return filing nearly impossible. Bilwani urged the government to urgently amend the legislation to restore business confidence and ensure fair treatment of documented taxpayers.

Motiwala Warns of Corruption, Misuse of Power

Echoing these concerns, Zubair Motiwala, Chairman of the Businessmen Group, warned that unchecked powers would open the door to corruption and abuse.

“When officials have arrest powers, there’s always the risk of misuse. Law-abiding businesses may be forced to meet unlawful demands just to avoid harassment,” he cautioned.

He urged the government to focus its enforcement efforts on the undocumented economy, rather than burdening the already compliant segment.

Business Community’s Key Demands:

• Complete repeal of Sections 37A and 37B of the Sales Tax Act

• No acceptance of SOPs as a middle-ground solution

• Urgent legislative amendments to fix anomalies in the tax structure

• Action against fake invoicing and undocumented entities

• Preserve dignity and security of compliant taxpayers

As tensions rise, the threat of a nationwide strike looms large — unless the government takes swift and decisive action to address business community concerns.

Published in Business Desk | July 4, 2025

Tax Breaks Extended to 50+ Entities — Who’s on the List?
July 2, 2025
The Finance Bill 2025-26, recently passed by Parliament, has introduced tax exemptions for over 50 institutions spanning public, welfare, development, and international organizations. The bill is expected to become law following presidential assent by President Asif Ali Zardari.

These exemptions cover a broad range of entities, including state-owned corporations, charitable institutions, financial bodies, and military-affiliated organizations. According to official sources, this move aims to promote welfare, development, and public interest causes, while aligning with the government’s fiscal and social priorities.

Key Entities Granted Tax Exemptions:

• Government and Regulatory Bodies:
  State Bank of Pakistan (SBP), SBP Banking Services Corporation, Securities and Exchange Commission of Pakistan (SECP), Privatisation Commission, Federal Board of Revenue Foundation, and the Public Private Partnership Authority.

• Military-Linked and Welfare Organizations:
  Fauji Foundation, Army Welfare Trust (AWT), Army Officers Benevolent Fund, Benevolent Fund/Bereaved Family Scheme.

• Research and Scientific Institutions:
  Pakistan Council of Scientific and Industrial Research (PCSIR), Pakistan Agricultural Research Council (PARC), Water and Power Development Authority (WAPDA), and Commission on Science and Technology for Sustainable Development in the South (COMSATS).

• Charitable and Development Funds:
  Prime Minister’s Special Fund for Victims of Terrorism, Chief Minister (Punjab) Relief Fund for IDPs, National Disaster Risk Management Fund, Supreme Court’s Diamer Bhasha & Mohmand Dams Fund, PM’s COVID-19 Relief Fund-2020, National Endowment Scholarship for Talent (NEST), and Balochistan Education Endowment Fund (BEEF).

• International and Multilateral Bodies:
  International Finance Corporation, Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Islamic Chamber of Commerce & Industry (OIC), ECO Trade and Development Bank, Islamic Corporation for Development of Private Sector, International Islamic Trade Finance Corporation, Saarc Energy Centre, Saarc Arbitration Council (SARCO), and International Parliamentarians’ Congress.

• Health and Social Welfare Institutions:
  Shaheed Mohtarma Benazir Bhutto Institute of Trauma (Karachi), Pakistan Poverty Alleviation Fund, National Rural Support Programme, Karandaaz Pakistan (exempt from tax year 2015 onwards), and Agha Khan Development Network (Pakistan).

• Notable Individual Exemptions:
  The pension of a former president and his widow has also been declared tax-exempt. Additionally, a special provision allows tax exemption on monetary awards granted to sportspersons representing Pakistan in the Olympic Games, effective from tax year 2025.

The exemption also applies to corporatized units of WAPDA, from the date of their creation until completion of their corporatization process.

Islamabad, July 2, 2025 — Prime Minister Shehbaz Sharif has directed the Federal Board of Revenue (FBR) to accelerate the expansion of its Point of Sale (POS) system across Pakistan’s retail sector. This move comes on the heels of a record 42% increase in tax revenues and a rise in the country’s tax-to-GDP ratio to 11.3%, the highest level in over a decade.

Speaking at a high-level meeting on tax reforms, the Prime Minister praised the FBR and the Ministry of Finance for their efforts in revenue mobilization, reporting an additional Rs865 billion ($3.03 billion) collected in the last fiscal year. He emphasized the importance of continuing reforms and improving taxpayer engagement.

“The FBR must widen the scope of its POS system across all retail outlets,” Sharif stated. “Digitizing production processes across industries, especially those with poor compliance, is essential for expanding the tax base.”

The POS system links retail cash registers directly to the FBR’s central system, enabling real-time monitoring of sales and automated calculation of sales tax. This digitization aims to reduce tax evasion and increase transparency in a largely undocumented retail sector.

In line with ongoing International Monetary Fund (IMF)-backed reforms, Pakistan has prioritized tax system digitization and the broadening of its taxpayer base to decrease reliance on external borrowing.

Sharif also underscored the need for improved taxpayer relations, instructing the FBR to maintain respectful communication with the public.

“The public must be treated with respect and dignity,” he said. “There will be zero tolerance for negligence in achieving our economic goals. We owe it to Pakistan’s future.”

Additionally, the Prime Minister called for the expansion of the Track and Trace Digital Production System, which monitors goods from manufacturing to delivery. Officials reported that the system is already active in the sugar, tobacco, and fertilizer sectors, and will soon be rolled out in the cement industry and others.

“All institutions must perform with full commitment to meet the targets for the new fiscal year,” the Prime Minister warned. “I am personally overseeing the progress on all revenue-related matters.”

KARACHI – June 27, 2025:
The Karachi Chamber of Commerce and Industry (KCCI) has launched a citywide protest campaign against what it terms as “oppressive and anti-business” provisions in the Finance Bill 2025-26, particularly targeting the proposed Section 37AA of the Sales Tax Act.

In a strongly worded statement, KCCI President Muhammad Jawed Bilwani accused the Federal Board of Revenue (FBR) of acting unilaterally and ignoring the Business Anomalies Committee, which includes presidents of chambers and trade associations from across the country.

“This is just the beginning,” Bilwani warned. “If our voices continue to be ignored, the protests will expand. Press conferences will follow, and we may even be forced to call for citywide or nationwide strikes.”

Business Community United Against Section 37AA

Bilwani specifically criticized Section 37AA, calling it a “draconian law” that gives FBR unchecked powers to:

• Freeze bank accounts

• Seize business funds

• Arrest taxpayers — even on mere suspicion

“How can anyone operate under such hostile conditions?” he asked. “This isn’t regulation; it’s intimidation.”

According to KCCI, the law disregards even fully compliant businesses and sends a dangerous message to both local entrepreneurs and international investors.

Business Leaders Eye Relocation Amid Mounting Pressure

Bilwani revealed that many business owners have approached KCCI to explore the possibility of relocating operations abroad due to Pakistan’s increasingly uncertain business environment.

“Our members are saying they’d rather invest in more stable and business-friendly countries. This isn’t just a Karachi issue — it’s a national concern.”

He pointed to rising energy costs, gas and water shortages, poor infrastructure, and long delays in tax refunds as factors pushing exporters and manufacturers to the brink.

No Real Relief for Exporters or Industrialists

Bilwani dismissed the finance minister’s claims that the budget is “public- and business-friendly,” calling such statements “detached from the realities on the ground.”

“There’s no relief for exporters. We survive not because of policy support, but because of our own resilience. Even our buyers abroad are urging us to move operations elsewhere.”

 Growing Nationwide Frustration

KCCI stated that its concerns are echoed by other major chambers across Pakistan, including in Faisalabad, Lahore, and Sialkot — the country’s key export hubs.

“This frustration isn’t isolated. It’s nationwide. The entire business community is demanding action, not rhetoric.”

Bilwani urged the prime minister and federal government to intervene immediately, review Section 37AA, and engage in meaningful dialogue with business leaders before irreversible damage is done to investor confidence and industrial stability.

 Protest Campaign Underway

As part of its protest, KCCI has put up banners across Karachi and plans to host press briefings, mobilize other trade bodies, and, if required, escalate to full-scale strikes.

“We’re not asking for favors — we’re asking for fairness,” said Bilwani. “The government must act now before it’s too late.”

ISLAMABAD – June 27, 2025:
The National Assembly has approved the Finance Bill 2025, introducing several important changes to tax laws, enforcement procedures, and digital economy regulations.

FBR and Lawmakers Disagree on Changes

Officials from the Federal Board of Revenue (FBR) claim that 98% of the original bill remains unchanged. However, lawmakers, including MNA Naveed Qamar, say the final bill reflects the full input of the finance committee, which made several amendments.

Despite the disagreement, both sides agree that the bill includes new procedural safeguards, especially to limit the discretionary powers of tax officers.

Major Changes in Finance Bill 2025

• Tax Officer Powers Limited
  Before suspending bank accounts of unregistered persons, FBR officers must now issue three notices. Suspensions can only happen in short intervals and with due warning.

• New Transaction Restrictions for Non-Filers
  Individuals who don’t file taxes will be barred from:

  • Buying property over Rs50 million (residential) or Rs100 million (commercial)

  • Withdrawing over Rs100 million in cash annually

  • Opening investment accounts over Rs50 million

• Arrest Powers Regulated
  In tax fraud cases over Rs50 million, the FBR must seek approval from a three-member committee before any arrest. Suspects must be presented before a magistrate within 24 hours.

• Digital Economy Compliance Tightened
  Online marketplaces, payment apps, and courier services must submit monthly statements. Failure to do so will lead to:

  • Rs300,000 fine for first offence

  • Rs1 million fine for repeated offences

• Solar Tax Reduced
  Sales tax on imported solar panels reduced from 18% to 10%, giving Rs8 billion relief.

• Carbon Levy Renamed
  The Carbon Levy is now called the Climate Support Levy, still charged at Rs2.50 per litre on fuel products.

• Lawmakers’ Perks Updated
  A new clause allows MPs to decide their own perks and aligns minister salaries with those of parliamentarians.

• Cargo Tracking Introduced
  A new electronic system will track all cargo to prevent smuggling under changes to the Customs Act 1969.

What’s Next?

The approved Finance Bill 2025 will now be sent to the President of Pakistan for final assent. Once signed, it will become law and take effect from July 1, 2025.