KCCI criticizes FBR for wrongly labeling taxpayers as ‘non-active’

Karachi Chamber of Commerce & Industry (KCCI) has raised concerns over the Inland Revenue Service (IRS) incorrectly classifying taxpayers as "non-active" despite an official extension of sales tax return deadlines by the Federal Board of Revenue (FBR).

Muhammad Jawed Bilwani, President of KCCI, said the IRS's actions are causing undue hardship for compliant taxpayers.

“It is deeply troubling that numerous taxpayers are being unfairly labeled as inactive solely due to delays in filing returns for two consecutive periods, even though official extensions were granted,” Bilwani said.

“This is creating unnecessary difficulties for honest taxpayers navigating an already complex regulatory environment.”

Bilwani attributed filing delays to recent abrupt changes in the tax system, including new mandatory requirements such as eight-digit Harmonized System (H.S.) codes, precise units of measurement and additional annexures in sales tax returns.

“The FBR’s decision to extend deadlines clearly indicates systemic strain, yet instead of facilitating taxpayers, they are being penalized,” he said.

He noted that local manufacturers face challenges in identifying correct H.S. codes, leading to inconsistencies, and criticized the restriction of unit measurements to kilograms only.

Bilwani urged the FBR to adopt a more taxpayer-friendly approach, including automated H.S. code assignments and phased implementation of new annexures with proper guidance.

In a separate development, KCCI and the Pakistan Business Council (PBC) Dubai signed a memorandum of understanding (MoU) on Monday to enhance trade and investment cooperation between Pakistan and the United Arab Emirates.

The agreement, signed by Bilwani and PBC Dubai Chairman Shabbir Merchant, aims to facilitate business linkages through trade delegations, joint participation in exhibitions and digital B2B matchmaking tools.

“This partnership will help Pakistani businesses access the UAE market and leverage Dubai’s role as a global trade hub,” Merchant said.

The MoU also includes provisions for dispute resolution through mediation and arbitration. Both organizations will hold monthly virtual meetings to monitor progress.

The agreement marks a step toward stronger economic collaboration between the two commercial hubs.