Business leader and former President of the Islamabad Chamber of Commerce and Industry (ICCI), Dr. Shahid Rasheed Butt, said on Monday that the government must eliminate the tax exemptions currently granted to the former FATA and PATA regions in the upcoming budget. This crucial step is necessary to ensure economic fairness and promote equitable growth across the entire nation.
He said that these exemptions, originally intended to promote development in the tribal areas, are now causing a loss of billions of rupees in national revenue.
Shahid Rasheed Butt said in a statement issued here today that many industrialists and smugglers have set up fake factories in FATA and PATA for products like ghee, steel, beverages, and cigarettes.
Through these fictitious setups, they import billions of rupees of raw materials tax-free and then sell them in cities like Karachi, Lahore, and Islamabad. This loophole enriches a powerful mafia while inflicting a massive loss on the national exchequer.
Due to these issues, the government decided to end tax exemptions for these areas last year. However, those exploiting these benefits managed to delay the decision by one year. Now, the same groups are trying once again to get an extension.
Shahid Rasheed Butt emphasized that the government should not give in to such pressures and must revoke these exemptions, as they provide no real benefit to the residents of tribal areas.
Instead, he said, people with low incomes are being exploited by corrupt businessmen and smugglers. He demanded action against these elements and called for the full recovery of evaded taxes.
He further revealed that this mafia registers fake companies using FATA and PATA addresses, while the products and sales are based in other parts of the country.
He informed us that by falsely showing production and sales from these tax-exempt areas, the companies escape the tax net, causing the national treasury to lose billions annually.
This situation is also unfair to legitimate businesses that pay taxes and struggle to compete with untaxed, illegal products. As a result, law-abiding companies are discouraged, and the overall economy suffers.
The business leader added that although the government announced plans to gradually impose a tax regime in FATA and PATA after integrating into the national mainstream, no serious steps have been taken due to political pressures.
Shahid Rasheed Butt urged the Federal Board of Revenue (FBR) and other relevant institutions to conduct organized crackdowns on fake business activities in these areas so that the tax burden can be fairly distributed across all industries.
He warned that if immediate action is not taken, the situation could spiral further out of control, deepening the culture of tax evasion and economic injustice.
Dr. Butt stressed that unchecked exploitation of tribal tax exemptions not only undermines the credibility of tax institutions but also deters foreign and local investment.
He called on the judiciary, media, and civil society to support efforts to restore transparency and fairness in Pakistan’s taxation system.
