The Senate Standing Committee on Finance has confirmed that Pakistan’s high tax rates are driving businesses to relocate to Dubai, with FBR officials acknowledging this concerning trend during a recent meeting chaired by Senator Saleem Mandviwalla. Discussions revealed that property taxes ranging from 5-35% for non-filers, along with other fiscal pressures, have created an unfavorable business environment prompting this exodus.
Despite proposals for tax amnesty schemes to retain businesses, the FBR has firmly rejected such measures, citing restrictions under FATF regulations and commitments to IMF loan programs. Officials emphasized that no tax relief would be granted, maintaining that existing tax obligations must be strictly enforced. The FBR is instead focusing on stricter enforcement measures, including daily crackdowns that have seen 20 businesses per day being shut down in major cities.
45 Small Business Ideas in Pakistan – Profitable & Low Investment Opportunities
Recent reforms in sectors like sugar production, where 95% digitization of records has led to a 34.5% increase in tax collection, demonstrate the FBR’s approach to combating tax evasion. Looking ahead, the revenue board plans to launch public awareness campaigns against tax fraud and introduce legislation for significantly higher penalties, with new fines set to take effect from July 2025. These measures aim to strengthen compliance while acknowledging the challenging business climate created by current tax policies.
FAQs:
Has any sector shown improvement in tax collection?
Yes, the sugar industry saw 34.5% higher tax collection after digitizing 95% of records, demonstrating the effectiveness of documentation reforms.
Why are businesses moving from Pakistan to Dubai?
Businesses are relocating due to Pakistan’s high tax rates, particularly property taxes of 5-35% for non-filers, making Dubai’s more favorable tax environment attractive.
Is the government offering any tax relief to stop this trend?
No, the FBR has rejected proposals for tax amnesty schemes, citing FATF compliance and IMF program requirements, insisting on strict tax enforcement instead.
What action is being taken against tax evaders?
The FBR is conducting daily crackdowns (shutting 20 businesses/day in major cities) and plans to implement higher penalties from July 2025 to strengthen compliance.
