Tax exemptions for Special Economic Zones, Special Technology Zones to be removed under IMF conditions, Senate panel informed

Our hands are tied; various tax concessions across sectors will be withdrawn, says FBR chairman 

The Senate Standing Committee on Finance was informed on Thursday that the government has decided to remove tax exemptions for Special Economic Zones (SEZs) and Special Technology Zones (STZs) in line with the conditions set by the International Monetary Fund (IMF).

In a meeting chaired by Senator Saleem Mandviwalla, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial briefed the committee about the government’s commitment to phase out all tax exemptions by 2035, as part of the IMF agreement. 

Langrial emphasised that, going forward, no SEZ or STZ will receive any form of tax relief. He added, “Our hands are tied,” and mentioned that various tax concessions and reduced rates across sectors would also be withdrawn.

During the same meeting, the committee rejected several budget proposals for the upcoming fiscal year, including a carbon levy of Rs2.50 per litre on petroleum products, removal of the 10% cap on the debt service surcharge for electricity consumers, and the introduction of a levy on small vehicles. 

Senators expressed concerns that these measures would burden the public.

Senator Anusha Rahman raised an issue regarding autonomous public-sector entities that hold significant investments despite having minimal staff. She highlighted the case of the Evacuee Trust Property Board (ETPB), which manages Rs13 billion with only 12 employees, and questioned why such institutions are allowed to retain and invest their revenues. 

The committee discussed potential reforms and exemptions to the Public Finance Management Act (PFMA) to address the issue.

Officials explained that institutions like Nadra, CDA, and Karachi Port Trust are allowed to invest their funds and earn profits, but these entities have not paid taxes recently. FBR officials reported that Nadra paid Rs8 billion in taxes over the last two years.

The committee opposed proposed amendments to the PFMA, insisting that all government-owned bodies should deposit their revenue into the Federal Consolidated Fund to ensure accountability.

In addition to these discussions, the committee reviewed changes to property taxation. The withholding tax on property sales valued at Rs100 million has been increased from 8% to 9.5%, with properties worth less than Rs100 million taxed at 8.5%. Properties below Rs50 million will be taxed at 7.5%. The Finance Bill 2025 also includes stricter measures against non-filers, including a reduction in property purchase tax for non-filers, shifting the burden to sellers.

Finally, the committee approved a proposal to impose a 5% tax on foreign online platforms.

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