Written by The Banking Post
The government has signalled an end to extending tax holidays, marking a shift towards a more uniform and compliance-based tax system.
National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan made the position clear during a pre-budget discussion, rejecting fresh demands from industry groups for long-term tax exemptions.
“We want to come out of this tax holiday culture step by step. Whether taxes are low or high, everyone must pay,” he said.
The move reflects a broader policy direction focused on expanding the tax base rather than offering incentives to attract investment.
Business leaders had sought extended benefits, including a 15-year corporate tax holiday for the semiconductor industry and VAT waivers on office rent, research and training facilities. But the revenue authority remains cautious, citing the risks of widespread exemptions.
The NBR chief warned that tax incentives often create distortions.
“If incentives are offered in one area, businesses tend to shift there. This creates leakages across the system,” he said, adding that investment decisions should be based on commercial viability, not tax breaks.
“Pay taxes first, then assess whether your net profit is viable. The mindset of doing business only when there is a tax holiday must change,” he added.
Alongside policy tightening, businesses raised concerns over operational challenges in the VAT system, particularly delays in updating past returns in the online platform.
In response, the NBR chief said the digital system was designed to improve transparency and efficiency, and instructed officials to quickly resolve pending issues and ensure accountability for delays.
Industry representatives also called for broader VAT reforms, warning that complex tax structures and compliance hurdles are discouraging investment in sectors such as renewable energy.
The government now faces the task of balancing stricter revenue mobilisation with maintaining an investment-friendly environment.
