ISLAMABAD: The Senate Standing Committee on Finance and Revenue has recommended restoring exporters to the Final Tax Regime (FTR) and reducing their tax burden, amid growing concerns that higher taxes could weaken Pakistan’s export competitiveness.
During a detailed discussion on budget proposals, representatives of the business community urged the government to fulfill its longstanding commitment to bring exporters back under the FTR. They argued that exporters had been repeatedly assured of the move, but no practical implementation had taken place.
Business leaders proposed a simplified taxation framework based on a single one percent tax, saying a predictable and straightforward regime would help boost exports and improve Pakistan’s competitiveness in international markets.
Several lawmakers backed the exporters’ demands and stressed the need for further tax relief.
Senator Talha Mahmood strongly opposed the existing tax structure and suggested reducing the tax rate to 0.5 percent. He warned that imposing higher taxes on exporters could discourage investment, reduce export growth, and negatively affect foreign exchange earnings.
Responding to the concerns, Finance Minister Muhammad Aurangzeb defended the government’s policies and highlighted measures already taken to support the export sector.
The minister informed the committee that the one percent advance tax on exporters had already been abolished, while super tax slabs applicable to exporters had also been removed. He further noted that the government was subsidizing export financing schemes to keep borrowing costs for exporters capped at 4.5 percent.
Aurangzeb emphasized that all sectors of the economy must contribute to the national tax base but dismissed concerns about an impending fiscal crisis. He stated that Pakistan currently has adequate domestic and external financial buffers to avoid a repeat of the economic challenges experienced in 2022.
The committee also reviewed concerns regarding delays in tax refunds. While some senators criticized the refund process managed by the Federal Board of Revenue (FBR), business representatives acknowledged that the FASTER refund system has significantly improved refund disbursements compared to previous years.
Following the debate, the Senate committee formally recommended that exporters be brought back under the Final Tax Regime and that their overall tax burden be reduced to support export-led economic growth and strengthen Pakistan’s foreign exchange earnings.
