Business leaders reject harsh budget measures, warn of shutdowns if policies stay

A key private sector forum has strongly opposed what it calls harsh, anti-business measures in the new federal budget, warning of protests if the extended authority granted to the tax body is not withdrawn.

The Board of Governors of Economic Policy and Business Development (EPBD) says it has serious concerns about a set of sweeping powers being handed to the Federal Board of Revenue (FBR), which it believes go far beyond fair tax enforcement.

In a statement, the Board said the proposed clauses under the guise of anti-money laundering laws will create a surveillance-heavy system where businesses operate under constant fear and uncertainty. 

This, they warned, “is not sound tax policy; it is legal overreach.”

The EPBD says the Finance Bill 2025 grants FBR officers extraordinary and undemocratic enforcement powers. The following clauses, in particular, have been opposed by the forum:

• Section 37AA: Authorises arrests without warrant based on mere suspicion of tax fraud — a provision the forum says could lead to abuse and harassment.
• Section 14AE: Allows arbitrary seizure of business premises and property without adequate safeguards.
• Section 37B: Permits detention of businesspersons for up to 14 days, extendable through a magistrate.
• Section 11E: Enables tax assessments and recovery based purely on suspicion, without requiring a proper investigation.
• Section 33 (13 & 13A): Introduces 10-year prison terms and Rs10 million fines for vaguely defined “tax fraud” — potentially criminalising ordinary business errors.
• Section 32B: Grants private auditors quasi-legal authority over businesses.

They say the rate should not be above 6%. A lower rate, they believe, would help revive business activity and make it possible to double public spending on education and health compared to last year.

At present, the effective tax burden on businesses in Pakistan has climbed to between 50% and 60% — the highest in the region.

This includes a 25% corporate tax, 25% tax on dividends, super tax, withholding tax, sales tax and import duties. Under these conditions, the EPBD says neither investment nor job creation is viable.

The organisation is calling for urgent action.

It wants all unnecessary enforcement powers granted to the FBR to be rolled back, interest rates cut to 6% to support economic revival, and the current aggressive tax structure replaced with a more balanced and fair policy. Business-friendly reforms and investment incentives must follow, the statement said.

The EPBD also issued a warning: “If these clauses remain part of the Finance Bill 2025, many businesses will be left with no choice but to shut down operations in Pakistan.”

“If the government believes it can collect taxes without taxpayers, let it try. And if the FBR thinks it can run an economy without businesses, it’s welcome to give it a shot,” the Board said.