President Karachi Chamber of Commerce & Industry (KCCI) Jawed Bilwani and Chairman Businessmen Group Zubair Motiwala, while strongly criticizing the newly enacted Sections 37A and 37B of the Sales Tax Act which grant sweeping arrest powers to FBR officials, urged the government to immediately repeal these draconian sections, warning that such excessive overreach not only undermines Pakistan’s image as a business-friendly destination but also severely discourages both local and foreign investors from undertaking any investment initiative.

Addressing a jam-packed press conference at KCCI Auditorium on Thursday, President KCCI and Chairman strongly criticized the glaring inaction during the recent Business Anomalies Committee meeting. “Keeping in view the sheer lack of government’s interest, the Karachi Chamber initiated large-scale protest campaigns, beginning with the widespread display of banners across Karachi and now escalating with today’s high-voltage press conference”, they added.

In addition to Chairman BMG and President KCCI, the presser was also attended by Vice Chairmen BMG Anjum Nisar & Mian Abrar Ahmed, Senior Vice President Zia ul Arfeen, Vice President Faisal Khalil Ahmed, Presidents of seven industrial town associations, Former Presidents KCCI, prominent business figures along with KCCI Managing Committee Members and a large number of businessmen and industrialists.

President KCCI stated that several other Chambers of Commerce have already held press conferences on this critical issue, and there is a unanimous consensus that Section 37A is completely incompatible with doing business in Pakistan. The entire business community firmly opposed to this law and fervently demanded repealing of the same and KCCI fully aligns itself with this collective stance.

He said that KCCI continues to receive an overwhelming number of complaints and expressions of concern regarding these Sections wherein business owners are repeatedly asking: How can we continue operating under the constant threat of Section 37A, which looms over our dignity like a sword?

President KCCI noted that this law unfairly targets compliant taxpayers rather than addressing the core issues plaguing Pakistan’s taxation system. These controversial sections primarily target all the individuals who are already within the tax net instead of acting against only those involved in fraudulent practices such as issuing fake or flying invoices.

He pointed out that the reality is that only 40 percent of Pakistan’s economy is documented, while the remaining 60 percent operates informally. Among the documented 40 percent, barely 2 percent might be involved in such malpractice whereas 98 percent registered taxpayers were fully tax-compliant, yet instead of focusing on a few culprits, the entire community of taxpayers will be harassed under the contentious Section 37A and 37B.

Highlighting the failure of enforcement by FBR, Jawed Bilwani stated that whenever FBR has filed cases against taxpayers, majority of the court verdicts have favored the taxpayers, while a meager number of decisions were given in favor of FBR’s Tax Collectors. Ironically, it is these FBR officers whose actions have proven baseless in majority of the cases yet they are now being given sweeping and unchecked powers under Sections 37A and 37B. In such an environment, Bilwani asked, where should the honest taxpayer turn to for justice?

While expressing dissatisfaction over the government’s complete disregard for the established consultative process involving the Business Anomaly Committee, Bilwani explained that historically, the Business Anomaly Committee meets before the Finance Bill is passed. Once constituted, meetings are promptly held where members present their concerns and suggestions. These are then reviewed through majority consensus. Meetings are subsequently held with the Member Inland Revenue (Policy) and Member Customs (Policy), and a clean, revised document is forwarded to the Chairman FBR. After the Chairman’s approval, a final meeting of the Anomaly Committee is summoned which is also attended by the Finance Minister, Chairman FBR and other Senior FBR Officials to give final touches to the document and approve all the recommendations decided by the Committee Members in consultation with FBR officials and then these recommendations are forwarded for final incorporation into the Finance Bill.

This year, Bilwani informed, the standard procedure was completely ignored for the first time. No proper consultation was held, forcing the members of the Business Anomaly Committee to resign and walk out in protest. Despite this, the budget was hastily passed, completely devoid of input from the business community. It is a matter of grave concerns that the anomalies identified not just by the committee but also by the National Assembly and Senate Standing Committees were mostly ignored despite being agreed upon during deliberations, he added.

President KCCI appealed the Prime Minister to immediately repeal Sections 37A and 37B in addition to issuing instructions to form a special committee comprising Presidents of all Chambers and FBR Officials whose meetings must start immediately for deliberating on 30 anomalies identified by Karachi Chamber and also other anomalies identified by peer chambers and trade associations. “Out of the 30 anomalies identified by KCCI, there are 5 to 6 critical anomalies that are so severe in nature that they would render it impossible for taxpayers to comply with the return filing requirements. These issues demand immediate rectification through urgent amendments to ensure the return filing process remains practical and workable”, he added.

Chairman BMG Zubair Motiwala, in his remarks, said that repealing this black law is widely being demanded, as the unchecked power to arrest will only lead to widespread harassment. “It will open the floodgates of corruption, as there is every likelihood that officials vested with arrest powers may misuse them for personal gain. In such situations, the law-abiding taxpayers, solely to protect their dignity, may be forced to comply with unlawful demands”, he added.

He was of the view that even a single action under Section 37A will send shockwaves through the entire business community. It will not only discourage existing businesses but also derail expansion plans that are currently underway, Motiwala warned while referring to remarks of some investors who have unequivocally stated that if Section 37A remains in effect, they will refrain from investing in any sector of Pakistan’s economy.

Motiwala stressed that the government should formulate strict laws to deal with those who are not part of the tax system at all, rather than harassing the already documented segment.