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 Protests will intensify unless Sections 37A and 37B are completely repealed,” said Bilwani, flanked by representatives of all seven industrial zones of Karachi.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.

ISLAMABAD – June 25, 2025:
Prime Minister Shehbaz Sharif has unveiled a comprehensive plan aimed at revitalizing Pakistan’s agriculture sector by cutting taxes on essential farm inputs and significantly increasing investment in agricultural technology.

The announcement came during a high-level policy meeting in Islamabad as part of the government’s preparations for the FY2025–26 federal budget. The move signals a strategic shift toward boosting rural incomes, food security, and overall productivity in a sector that contributes nearly 23% to the national GDP and employs over one-third of the country’s labor force.

Key Announcements from PM Shehbaz Sharif

During the session, PM Sharif called agriculture “the backbone of Pakistan’s economy” and emphasized the urgent need for sustainable, tech-driven reforms. He directed key ministries to:

→ Reduce import duties on farm machinery
→ Avoid new taxes on fertilizers and pesticides
→ Fast-track development schemes for storage, irrigation, and modern harvesting systems
→ Promote local agri-tech solutions and rural innovation hubs

National Agri-Tech Action Plan in Focus

Officials briefed the Prime Minister on the National Agriculture Innovation and Growth Action Plan, a comprehensive blueprint designed to:

• Improve crop yields through modern farming tools and precision agriculture

• Expand access to low-cost credit for small and medium-sized farmers

• Enhance value-added agri exports to increase rural profitability

• Digitize marketplaces and reduce inefficiencies in supply chains

The plan also includes infrastructure development to improve cold storage, warehousing, and rural connectivity — major bottlenecks affecting the post-harvest supply chain in Pakistan.

Ignite’s Role in Driving Agri Innovation

The Prime Minister praised the work of the Ignite National Technology Fund, which has successfully launched 129 agri-tech startups across Pakistan. These ventures are working on smart irrigation systems, AI-powered yield forecasts, drone-based spraying, and mobile apps that connect farmers directly to buyers.

PM Sharif highlighted that these startups are not only helping farmers lower their costs but also creating jobs in rural communities and attracting tech talent into the agriculture domain.

Support for Overseas Agricultural Scholars

In a bid to harness global expertise, the Prime Minister emphasized the importance of supporting Pakistani students studying agriculture in countries like China. These professionals, he said, will play a crucial role in introducing modern research and best practices into the local context.

Looking Ahead: Budget Priorities for FY26

As budget talks near completion, the government’s agriculture strategy is being positioned as a core pillar of its economic agenda for FY2025–26. With inflation, water shortages, and farmer debt mounting, the administration hopes that a mix of targeted tax relief, smart subsidies, and digital innovation can unlock the true potential of Pakistan’s agrarian economy.

Budget 2025-26 Backlash Grows Over Proposal to Scrap Tax
I SLAMABAD, June 24, 2025 — Teachers and researchers across Pakistan have strongly condemned the federal government’s proposal to abolish the longstanding 25% tax rebate for academic professionals, calling it a “deliberate and destructive blow” to the country’s fragile higher education sector.

The Federation of All Pakistan Universities Academic Staff Associations (FAPUASA) and the All Government Employees Grand Alliance (AGEGA) jointly voiced their outrage during a press conference held at the National Press Club on Monday. They demanded the immediate restoration of the rebate and a significant increase in federal funding for higher education institutions.

“Not a Luxury, But a Lifeline”

Speaking at the press conference, FAPUASA President Prof. Dr. Mazhar Iqbal, AGEGA Chief Coordinator Rahman Ali Bajwa, and senior office-bearers including Dr. Mohammad Jadoon Khan and Dr. Iqbal Jatoi stressed that the rebate — set to be withdrawn from July 1 — had never been a luxury.

“It was a vital support mechanism for university faculty and researchers who often pay out of pocket for journal fees, research materials, and academic travel,” said Dr. Mazhar Iqbal. “Eliminating this rebate will demoralize scholars, stifle research productivity, and accelerate brain drain.”

A Timeline of Cuts and Contradictions

Originally introduced in 2006 by the Musharraf administration as a 75% tax rebate, the benefit aimed to promote academic research and retention. Over time, it was slashed to 40% by the PML-N government in 2013, and now faces complete abolition under the same party’s current tenure.

“The government’s actions reflect selective austerity,” said Rahman Bajwa. “They cite IMF objections to the rebate, yet no objections were raised when FBR purchased luxury vehicles worth billions or when parliamentarians raised their salaries by 600%.”

Shrinking Support Amid Growing Needs

The speakers noted that while Pakistan’s federal budget has ballooned from Rs5.9 trillion in 2018 to Rs17.5 trillion in 2025 — a 196% increase — higher education funding has stagnated, with recurring grants stuck around Rs65 billion. Meanwhile, the number of public universities has risen from 126 to 160, and operational costs have surged due to inflation and expansion.

According to the Economic Survey of Pakistan, the country spends just 0.8% of its GDP on education, and a meager 0.37% on higher education — well below the UNESCO-recommended 4–6%, and far behind neighboring countries like India and Bangladesh.

Both the PML-N and PPP, the speakers reminded, had pledged in their election manifestos to increase education spending to 4% of GDP — promises they have yet to fulfill.

Warning of University Shutdowns

Dr. Iqbal Jatoi warned that continued disregard for the teaching community’s concerns could spark a nationwide protest. “If the government fails to reverse this decision and increase the higher education budget to at least Rs200 billion, we will shut down universities across Pakistan.”

The speakers emphasized that any country aspiring to build a knowledge-based economy must first value its educators and researchers. “A nation that refuses to invest in its intellectual capital cannot survive or compete in the modern world,” said Dr. Mazhar.

Pakistan Hits Rs298 Billion in Tobacco Tax Revenue for FY2025, But WHO Flags Weak Regulation

ISLAMABAD, June 24, 2025 — Pakistan collected a record Rs298 billion (approximately $1.1 billion) in tobacco taxes during 2024, according to the newly released Global Tobacco Epidemic Report 2025 by the World Health Organization (WHO). This achievement is being hailed as a key milestone in Pakistan’s ongoing efforts to curb tobacco use through aggressive fiscal policy.

The rise in revenue comes on the back of landmark tax reforms, including the tripling of excise duty on cigarettes, a doubling of the minimum price per pack, and an overall 28% drop in legal cigarette production. These changes, implemented in close technical cooperation with the Federal Board of Revenue (FBR) and the WHO, not only curbed cigarette availability but also delivered a significant boost to public coffers.

WHO Acknowledges Fiscal Success but Calls for Broader Action

While praising Pakistan’s fiscal measures, the WHO warned that the country still lags in implementing comprehensive tobacco control policies. Pakistan remains among 40 countries globally that have yet to fully adopt a single MPOWER measure — the WHO’s six-pronged framework for controlling tobacco use. These measures include:

• Monitoring tobacco use and prevention policies

• Protecting people from tobacco smoke

• Offering help to quit tobacco use

• Warning about the dangers of tobacco

• Enforcing bans on tobacco advertising, promotion, and sponsorship

• Raising taxes on tobacco

“Raising tobacco taxes is one of the most effective tools we have to save lives and generate revenue,” said Dr. Tedros Adhanom Ghebreyesus, WHO Director-General. “But without comprehensive policies in place, the gains made through taxation alone may be undermined.”

Regional Comparisons: Pakistan Still Behind Peers

Compared to regional neighbors like India, Bangladesh, and Sri Lanka, Pakistan’s broader tobacco control efforts appear underdeveloped. India, for example, mandates graphic health warnings on 85% of cigarette packaging, has banned most forms of tobacco advertising, and runs large-scale public awareness campaigns — measures that Pakistan has yet to implement in full.

E-Cigarettes and Emerging Products: A Growing Blind Spot

The WHO report also drew attention to emerging nicotine products such as e-cigarettes and nicotine pouches, which are growing in popularity among youth in many countries. In Pakistan, however, these products remain largely unregulated, raising concerns about a potential new front in the tobacco epidemic.

Health experts have urged the government to move swiftly to regulate new tobacco and nicotine delivery systems, citing global trends that show their increasing appeal to younger demographics.

The Road Ahead

Pakistan’s success in raising tobacco taxes represents a major step forward in both public health and revenue generation. But health advocates warn that this momentum must be used to implement broader anti-tobacco measures, especially as the industry diversifies its offerings and tactics.

“Fiscal reforms are a powerful start,” said a WHO policy advisor. “But without robust advertising bans, quit support, and public education, Pakistan risks falling short of truly protecting its citizens — especially the youth.”