The National Assembly Standing Committee on Finance on Monday reviewed several taxation measures proposed in the federal budget, including relief for exporters, changes in travel-related taxes and the abolition of certain levies.
During the committee meeting, member Mirza Ikhtiar Baig noted that the government had previously abolished the fixed tax regime for exporters and brought them under the normal tax regime.
Officials of the Federal Board of Revenue (FBR) informed the committee that the tax rate applicable to exporters had now been reduced from 2 percent to 1.2 percent. They explained that the revised rate would serve as a minimum tax under the normal tax regime.
Former foreign minister Hina Rabbani Khar observed that exporters in Pakistan were subject to advance taxation. Tax officials responded that the system had been designed to facilitate exporters and noted that advance tax mechanisms were already widely used across different sectors of the economy.
According to officials, the corporate sector pays advance tax on a quarterly basis, while banks make advance tax payments every month. They added that banking institutions generally face higher taxation levels globally.
The committee was also informed that three major business groups involved in fertiliser manufacturing receive subsidies through concessional LNG supplies.
Discussing taxation in the aviation sector, an FBR member told the committee that taxes on international business-class travel had been significantly reduced. The official said the move was aimed at supporting the aviation industry, which had suffered losses, while also improving tax collection.
FBR member Hamid Atiq Khan told lawmakers that many passengers had begun purchasing tickets abroad to avoid higher taxes, reducing domestic tax revenues.
The committee was further informed that the capital value tax (CVT) on overseas assets had been abolished.
Lawmakers also discussed the so-called "pink tax." Hamid Atiq Khan said the tax rate had been reduced from 18 percent to zero. Committee member Dr Nafisa Shah objected to the term and urged officials to change its name.
Responding to the suggestion, the FBR official agreed, saying the terminology would be revised.
The committee was also informed that an 18 percent sales tax had been imposed on the shipping industry under the proposed tax measures.
The meeting continued its review of budget proposals and taxation reforms aimed at balancing revenue generation with support for key sectors of the economy.