ISLAMABAD: Pakistan will no longer grant tax exemptions to the new Special Economic Zones (SEZs) under the IMF-mandated reforms, while a proposal to tap suspicious bank transactions where the banks will be bound to flag them is among fresh moves to tighten revenue collection.
The FBR has sought access to the Suspicious Transaction Reports (STRs) from banks to detect high-net-worth individuals who remain outside the tax net or paying less tax while having times high transactions in their bank accounts.
Against the earlier provision, now the banks will flag such transactions and report to the FBR, the premier tax collection federal body’s Chairman Rashid Langrial told the National Assembly’s Standing Committee on Finance on Monday that met here with MNA Naveed Qamar in the chair.
Explaining, Langrial said if someone is earning Rs10 million a month and making transactions worth Rs100 million, a notice will be issued.
He also confirmed that tax holidays for existing SEZs will end by 2035. “New SEZs/STZs will not get any exemptions going forward,” he said, adding, “The IMF wanted all exemptions scrapped by 2027, but we negotiated to stretch it till 2035.”
On this, lawmakers said it would discourage any investment in the sector, while they were conveyed that negotiations with the IMF were “Locked and stoned.”
Defending a new withholding tax on online shopping, he said it could generate up to Rs59 billion in additional revenue.
He also backed the recently imposed tax on e-commerce transactions, calling it the only feasible way to tax digital vendors.
“This is not a sacred text that cannot be amended. If we don’t tax them through this system, we won’t be able to at all,” he told lawmakers.
However, instead of the current proposed different rates of levy ranging 1-2 percent, the finance ministry informed the committee that a single levy would be proposed after consultations and the committee would be informed accordingly.
Member Inland Revenue Policy explained that the new tax applies to local and foreign sellers using Pakistani online platforms, adding that a separate system is being developed for cross-border digital vendors.
“If a foreign seller keeps goods in Pakistan, they will be taxed the same way,” he clarified. Amid geopolitical tension in the Middle East, former energy minister Omar Ayub Khan warned that the ongoing Iran-Israel conflict could disrupt global oil supply routes, particularly through the Strait of Hormuz, driving up international prices and inflating Pakistan’s current account and fiscal deficits.
“Iran is the world’s sixth-largest oil producer — any disruption will hit us hard,” he cautioned. Finance Minister Muhammad Aurangzeb confirmed that the prime minister had formed a high-level committee to assess the situation.
“The committee met today to evaluate supply risks and review oil stockpiles,” he told the panel.
The secretary finance assured that if the international oil prices increase, the government will not increase the petroleum development levy (PDL), but pass its impact on to the consumers. The government has targeted to collect Rs1.486 trillion from PDL in FY2025-26.
Several lawmakers and business leaders pushed back on the FBR proposals to post its staff or security personnel at the industrial units to monitor production.
“If police walk into my factory tomorrow, I will shut it down,” said businessman and committee member Ikhtiar Baig.
Sharmila Faruqui warned such powers would turn the FBR into “another NAB.” The committee gave its nod for another IMF-backed proposal by removing the distinction between table -I and II. All Non-Profit Organizations (NPOs) are now subject to standard compliance requirements to qualify for 100 percent tax credit.
This ensures better oversight, reduces misuse of blanket exemptions and aligns tax benefits with clearly defined regulatory conditions, the FBR added.
