Pakistan’s leading business chambers have issued a unified call for major tax reforms, urging the government to repeal controversial laws like Section 7E of the Income Tax Ordinance, which they blame for fueling capital flight, and to dismantle the FATA/PATA tax exemption regime, described as a globally unique market distortion.

The demand came during a landmark meeting between the Karachi Chamber of Commerce and Industry (KCCI) and the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), where leaders pledged to form a united front to address critical economic challenges, according to a KCCI statement issued today .

At the high-level meeting held at KCCI, President KCCI Rehan Hanif elaborated on the serious implications of Section 7E, which was introduced through the Finance Act 2022. He explained that the provision, which imposes a one percent tax on the fair-market value of immovable properties by treating them as deemed income, has adversely impacted the real estate sector. Hanif called on the government to objectively assess if removing the provision would be more beneficial for the economy and, if so, to withdraw it without delay.

Hanif also pointed to the FATA/PATA tax exemptions as a source of an uneven playing field, stating that the policy has created two parallel taxation regimes. He described this as an “anomaly that exists nowhere else in the world” and asserted that it must be addressed immediately.

The KCCI president stressed that the country”s business community faces common challenges that must be resolved collectively. ‘It is essential that not just KCCI and FPCCI, but all chambers of commerce, join hands to raise a united and stronger voice so that the issues confronting the business community attract the attention of policymakers,’ he stated, citing the shared demand for an electricity tariff of 9 cents per kWh as an example of an issue that should be advanced from a single, unified platform.

Highlighting other pressing matters, Hanif noted the “impracticalities” of implementing e-invoicing and e-bilty systems and expressed concern over Pakistan”s exports stagnating at around US $32 billion. He also urged the FPCCI to collaborate on resolving the long-pending issue of Port Qasim’s industrial land, a problem that has remained unsettled for over two decades.

Echoing the call for unity, Senior Vice President FPCCI Saquib Fayyaz Magoon described the meeting as a “historic moment” for building enduring cooperation between the two premier trade bodies. “If the business community wants its voices heard and aims to strengthen Pakistan’s economy, they will have to act in unity,” Magoon remarked, adding that without working together, relevant issues will remain unresolved.

Magoon made a forceful demand for institutionalized consultation, stressing that the federal budget process must not proceed without prior formal engagement with the business community. He called on all chambers to devise a joint action plan to ensure no significant government decision is made “without the business community being on board.”

He confirmed that both FPCCI and KCCI share identical views on the negative impacts of the e-invoicing and e-bilty systems, Section 7E, and the FATA/PATA regime. ‘On these fronts. we are on the same page. What remains is to raise a single unified voice to tackle them all,’ he emphasized.

Magoon also addressed the Dangerous Petroleum Licence (DPL) issue, explaining that the Department of Explosives was incorrectly applying its licensing regime to industrial raw materials that are not petroleum-hazardous goods. He affirmed that advocacy efforts have been successful and that he expects the matter to be resolved within a month.

Additionally, he raised concerns over the sales tax on indenting commission services in Sindh. While the business community had succeeded in reducing the rate from 15 percent to 3 percent, he warned that it is now reportedly being revised upward to 8 percent. Such an increase, he cautioned, would discourage foreign exchange inflows and must be fought “jointly.”

The meeting, attended by senior representatives from both chambers including KCCI’s Muhammad Raza and Muhammad Arif Lakhani and FPCCI”s Aman Paracha, concluded with a reaffirmed joint resolve for cohesive action and collective advocacy to achieve economic revival and stability.