The Senate Standing Committee on Finance and Revenue has recommended restoring exporters to the Final Tax Regime (FTR) and reducing their overall tax burden, following a heated discussion on the potential impact of taxation on Pakistan’s export sector.
Representatives from the business community told the committee that exporters have repeatedly been assured of a return to the FTR, but the promised move has yet to be implemented. They urged the government to introduce a simplified one percent tax framework to enhance competitiveness and support export growth.
Several lawmakers expressed concern over the current taxation structure. Talha Mahmood argued that exporters should be subject to lower tax rates and proposed reducing the tax rate to 0.5 percent, warning that excessive taxation could weaken Pakistan’s export performance.
During the meeting, Muhammad Aurangzeb defended the government’s policies, stating that the one percent advance tax on exporters had already been abolished and that super tax slabs affecting exporters had been removed.
The finance minister also highlighted government support measures, including subsidies that keep export financing rates capped at 4.5 percent. He stressed that all sectors must contribute to the national tax base while dismissing concerns about a looming fiscal crisis.
Aurangzeb said Pakistan currently has adequate domestic and external financial buffers, reducing the risk of economic pressures similar to those experienced in 2022.
The committee also discussed delayed tax refunds. While some senators criticized the refund process managed by the Federal Board of Revenue, business representatives acknowledged that the FASTER refund system has significantly improved payment timelines compared to previous years.
Following the debate, the committee formally recommended bringing exporters back into the Final Tax Regime and reducing the tax burden on the sector to support exports and economic growth.
Also read: Pakistan Textile Sector Calls for Urgent Reforms to Strengthen Exports
