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The Federal Board of Revenue's withholding and advance tax policies are placing severe strain on Pakistan's Fast-Moving Consumer Goods (FMCG) sector, especially the food industry, according to Hyderabad SITE Association of Trade and Industry Chairman Zubair Ghangra. Ghangra stated that the current taxation framework has become a major obstacle to industrial growth and business sustainability, as reported by Dawn.
According to Dawn, he said the tax collection mechanism has created operational hurdles throughout the supply chain, slowing down commercial activity and increasing the burden on organised businesses. Manufacturers, wholesalers and distributors are being disproportionately targeted because a significant portion of Pakistan's retail sector still operates outside the documented economy. According to Ghangra, the presence of thousands of unregistered retailers has shifted the tax burden almost entirely onto compliant businesses. He stated that this imbalance has sharply increased operational expenses for the formal sector while allowing undocumented traders to continue functioning without accountability. The unequal structure has intensified financial pressure on registered companies already struggling with inflation and weak consumer demand. The industry leader further explained that excessive documentary and compliance requirements have worsened the situation for FMCG and food companies. He said the system has disrupted cash flow management and created unnecessary administrative complications for businesses operating on narrow profit margins. These additional costs are ultimately passed on to consumers, contributing to rising prices and economic instability. Ghangra criticised the taxation model for discouraging formal business practices while indirectly supporting the expansion of the undocumented economy. He argued that registered companies are facing continuous financial and regulatory pressure, whereas unregistered market participants remain largely untouched by the tax net, as highlighted by Dawn. He warned that no fair and efficient taxation system can exist unless authorities address this structural imbalance. He urged policymakers to reform the current tax framework and broaden the tax base instead of repeatedly burdening documented sectors, as reported by Dawn. (ANI)
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