KARACHI:
President of the Karachi Chamber of Commerce & Industry (KCCI) Jawed Bilwani and Chairman of the Businessmen Group Zubair Motiwala, while strongly criticising the newly enacted Sections 37A and 37B of the Sales Tax Act — which grant sweeping arrest powers to FBR officials — urged the government to immediately repeal these draconian sections. They warned that such excessive overreach not only undermines Pakistan’s image as a business-friendly destination but also severely discourages both local and foreign investors from undertaking any investment initiative.
Addressing a press conference at KCCI on Thursday, the KCCI president and chairman said that, keeping in view the sheer lack of government interest, the Karachi Chamber initiated large-scale protest campaigns, beginning with the widespread display of banners across Karachi and now escalating with today’s high-voltage press conference.
The KCCI president stated that several other Chambers of Commerce have already held press conferences on this critical issue, and there is a unanimous consensus that Section 37A is completely incompatible with doing business in Pakistan. The entire business community firmly opposes the law and fervently demands its repeal, and KCCI fully aligns itself with this collective stance.
He said that KCCI continues to receive an overwhelming number of complaints and expressions of concern regarding these sections, wherein business owners are repeatedly asking: How can we continue operating under the constant threat of Section 37A, which looms over our dignity like a sword?
The KCCI president noted that this law unfairly targets compliant taxpayers rather than addressing the core issues plaguing Pakistan’s taxation system. These controversial sections primarily target individuals who are already within the tax net instead of acting only against those involved in fraudulent practices such as issuing fake or flying invoices.
He pointed out that the reality is that only 40% of Pakistan’s economy is documented, while the remaining 60% operates informally. Among the documented 40%, barely 2% might be involved in such malpractice, whereas 98% of registered taxpayers are fully tax-compliant. Yet, instead of focusing on a few culprits, the entire community of taxpayers will be harassed under the contentious Sections 37A and 37B.
Highlighting the failure of enforcement by FBR, Jawed Bilwani stated that whenever FBR has filed cases against taxpayers, the majority of court verdicts have favoured the taxpayers, while a meagre number of decisions were given in favour of FBR’s tax collectors. Ironically, it is these FBR officers whose actions have proven baseless in the majority of the cases, yet they are now being given sweeping and unchecked powers under Sections 37A and 37B. In such an environment, Bilwani asked, where should the honest taxpayer turn to for justice?
While expressing dissatisfaction over the government’s complete disregard for the established consultative process involving the Business Anomaly Committee, Bilwani explained that historically, the Business Anomaly Committee meets before the Finance Bill is passed. Once constituted, meetings are promptly held where members present their concerns and suggestions. These are then reviewed through majority consensus. Meetings are subsequently held with the Member Inland Revenue (Policy) and Member Customs (Policy), and a clean, revised document is forwarded to the FBR chairman.
After the chairman’s approval, a final meeting of the Anomaly Committee is summoned, which is also attended by the finance minister, chairman FBR and other senior FBR officials to give final touches to the document and approve all the recommendations decided by the Committee Members in consultation with FBR officials. These recommendations are then forwarded for final incorporation into the Finance Bill.
This year, Bilwani informed, the standard procedure was completely ignored for the first time. No proper consultation was held, forcing the members of the Business Anomaly Committee to resign and walk out in protest. Despite this, the budget was hastily passed, completely devoid of input from the business community. It is a matter of grave concern that the anomalies identified were mostly ignored, he added.
