Pakistan Business Community Protests Finance Act 2025: Demands for Fair Tax Reforms

On July 19, 2025, Pakistan’s business community staged a massive nationwide shutdown to protest the Finance Act 2025. Led by the Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP), traders, industrialists, and retailers across cities like Karachi, Lahore, Hyderabad, and Peshawar closed their shops and factories. They are demanding the removal of what they call “oppressive” tax laws, including Sections 37A and 37B of the Income Tax Ordinance, as well as SRO 350 and SRO 709. These rules, they argue, threaten businesses with unfair taxes and excessive powers for the Federal Board of Revenue (FBR).

Why Are Businesses Protesting the Finance Act 2025?

The Finance Act 2025, which took effect on July 1, 2025, introduced new tax measures that have angered Pakistan’s business community. BMP Chairman Mian Anjum Nisar called the shutdown a “vote of no-confidence” in the government’s economic policies. The main issues include:

• Sections 37A and 37B: These give FBR officials the power to arrest and prosecute business owners without proper legal process, creating fear among traders.
• SRO 350 and SRO 709: These rules enforce complex electronic invoicing (e-invoicing) and e-Bilty systems, which many businesses find hard to implement due to lack of training and infrastructure.
• Cash Transaction Penalties: Section 21(s) imposes heavy fines for cash transactions above PKR 200,000, affecting small businesses that rely on cash.
• High Taxes on Property and Transactions: A 16% sales tax on property rent and a 20% tax on transactions over PKR 200,000 have added financial pressure on businesses.

Mian Anjum Nisar said these rules were introduced without proper discussion with businesses, leaving them feeling targeted. “You cannot fix the economy by scaring its backbone,” he warned, highlighting the unity of traders across Pakistan.

Nationwide Shutdown: Impact on Karachi, Lahore, and Beyond

The strike on July 19 was one of the largest protests by Pakistan’s business community in recent years. In Karachi, about 90% of commercial activities, including wholesale markets, retail shops, and industries, stopped. No export shipments left the port, and all seven industrial zones halted production. In Lahore, major markets like Shah Alam Market and Anarkali shut down completely, showing strong support for the protest.

Smaller cities like Faisalabad, Gujranwala, Sialkot, Quetta, and Peshawar also joined the strike, making it a nationwide movement. However, Islamabad and Rawalpindi saw normal business activity, as the Islamabad Chamber of Commerce and Industry (ICCI) chose to wait for government promises to be fulfilled.

Business Community’s Demands for Economic Justice

The BMP and other trade bodies, like the Karachi and Lahore Chambers of Commerce and Industry (KCCI and LCCI), are not against tax reforms but want fair and practical changes. Their key demands include:

1. Remove Sections 37A and 37B: Stop FBR’s arrest powers without court approval.
2. Revise SRO 350 and SRO 709: Simplify e-invoicing and e-Bilty rules with proper training and timelines.
3. End Cash Transaction Penalties: Withdraw Section 21(s) to support small businesses.
4. Lower Taxes: Reduce the 16% sales tax on property rent and 20% tax on large transactions.
5. Restore Final Tax Regime: Bring back simpler tax rules for exporters.

Mian Anjum Nisar emphasized that businesses support digitization but need time and resources to adapt. “Pakistan’s economy runs on trust and dialogue, not sudden rules and threats,” he said.

Government Response and Ongoing Talks

The government has formed a committee, led by Special Assistant to the Prime Minister (SAPM) Haroon Akhtar, to address traders’ concerns. Some progress was made, including an agreement to remove Clause 9 of the Finance Act and review Section 37A. However, the KCCI and LCCI are frustrated because no written promises have been made.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) initially called off the strike after talks but later supported the protests when no firm action followed. KCCI President Jawed Bilwani warned that without written assurances, businesses might extend the strike or take stronger actions, like halting tax filings.

Economic Risks of Ignoring the Protests

The BMP warned that ignoring these demands could harm Pakistan’s economy further. The strike already disrupted supply chains, stopped exports, and closed markets, costing billions in revenue. If the government does not act, businesses fear:

• Investment Flight: Companies may move to other countries due to fear of FBR’s powers.
• Job Losses: Small businesses may shut down, leading to unemployment.
• Reduced Exports: The halt in industrial activity could hurt Pakistan’s trade.

LCCI President Mian Abuzar Shad called the strike a “defining day for economic justice,” noting that Karachi and Lahore alone make up over 60% of Pakistan’s economy.

What Next for Pakistan’s Business Community?

The business community is planning more protests, with the All Pakistan Anjuman Tajiran announcing demonstrations starting July 26, 2025, if demands are not met. The BMP and other groups are pushing for written government commitments to reverse the controversial tax laws. They remain united, with over 50 trade associations supporting the cause.

The peaceful and disciplined strike on July 19 showed the strength of Pakistan’s traders and industrialists. “We are not looking for a fight; we want fairness,” said Mian Anjum Nisar. The ball is now in the government’s court to act quickly and restore trust.