Senators Demand ‘One Tax Only’ System And More Relief for Exporters

The Senate Standing Committee on Finance and Revenue has recommended bringing exporters back into the Final Tax Regime (FTR) and reducing their tax burden after a heated debate in which lawmakers warned that excessive taxation could hurt Pakistan’s export sector.

Representatives of the business community told the committee that exporters have repeatedly been promised a return to the FTR but the move has yet to materialize.

They urged the government to adopt a simplified one percent tax framework to improve competitiveness.

Several senators argued that exporters should face lower taxes than those currently proposed. Senator Talha Mahmood opposed the existing framework and called for reducing the rate to 0.5 percent, warning that higher taxes could undermine export growth.

Finance Minister Muhammad Aurangzeb defended the government’s policies, stating that the one percent advance tax on exporters had already been abolished, super tax slabs affecting exporters had been removed, and subsidies were being provided to keep export-sector financing rates capped at 4.5 percent.

The minister maintained that all sectors must contribute to the national tax base, while rejecting concerns about a potential fiscal crisis. He said Pakistan currently possesses sufficient domestic and external buffers to avoid a repeat of the economic pressures experienced in 2022.

The discussion also touched on delayed tax refunds. While some lawmakers criticized the Federal Board of Revenue’s refund process, business representatives acknowledged that the FASTER refund system had significantly improved payments compared to previous years.

Following the debate, the committee formally recommended restoring exporters to the Final Tax Regime and reducing their overall tax burden.