Super tax to be abolished in phases, FBR chairman Langrial tells Karachi industrialists

The government intends to abolish the super tax completely, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial told industrialists at the Korangi Association of Trade and Industry (KATI) in Karachi, Business Recorder reported on Thursday. He said the rate had already been cut by 2 percentage points and that the aim was to phase it out gradually.

He gave no date, no schedule and no figure for the revenue the FBR would lose. Any change to the super tax has to come through a Finance Act or another amendment to the tax law, so a formal timetable would normally come with a budget.

What the super tax is

The super tax is an extra levy under section 4C of the Income Tax Ordinance on companies and individuals with high incomes, charged on top of normal income tax. It was introduced in 2015 as a one-off for people displaced by military operations and has been extended and raised in several budgets since. Businesses have long argued it pushes the effective tax rate on large, documented companies far above that of their regional competitors.

• Who pays: companies, associations and individuals above the income thresholds in the law, with higher slabs for banks.
• Who does not: salaried people below those thresholds. If you are on a salary, your tax is set by the normal slabs; check yours with the income tax calculator.

Other promises made at KATI

• An FBR office at KATI to deal with industrialists' cases, and the FBR help desk extended from Karachi to Sukkur.
• Meetings on border trade problems facing the leather industry.
• A track and trace model like DRAP's for the pharmaceutical industry.

KATI President Sheikh Umer Rehan asked the FBR to pay refunds on time, automate refund disbursement, and cut face-to-face contact between tax officials and businesses to reduce discretion and corruption.

Why it matters

Pakistan's tax collection depends heavily on a small number of large companies, and the IMF has pressed the government to widen the base rather than load existing payers. Cutting the super tax would leave a gap that has to be filled elsewhere, which is why a phased approach is being described. The same day, Business Recorder reported that nearly 12 million people file tax returns only to buy property or vehicles at lower withholding rates, a sign of how narrow the real base is.

Freelancers and business owners can estimate their own liability with the freelancer tax calculator and the sales tax calculator.