KCCI Backs Minerals Exporters Seeking Review of 5% Withholding Sales Tax

The Karachi Chamber of Commerce and Industry (KCCI) has pledged support to Pakistan’s mines and minerals exporters, who say a newly introduced 5% withholding sales tax on locally procured minerals has disrupted supply chains and affected exports.

The concerns were raised during a meeting between KCCI officials and a delegation of the Mines & Minerals Association, led by Syed Muhammad Akram, following the implementation of the tax under the Finance Act 2026.

Exporters Raise Concerns Over New Tax

According to the association, exporters are now required to deduct a 5% withholding sales tax from payments made to suppliers, mine owners, and brokers.

Syed Muhammad Akram said the sector depends on hundreds of small-scale suppliers operating in remote mining areas, many of whom are outside the formal tax system. He said the new requirement has led to resistance from suppliers, disrupting the supply of raw materials needed to meet export orders.

He also argued that the tax could affect Pakistan’s ability to fulfill international contracts and maintain credibility with overseas buyers.

Industry Cites Impact on Export Competitiveness

Akram said profit margins in the minerals export sector typically range between 2% and 3%, making it difficult for exporters to absorb a 5% withholding sales tax.

He added that chromite exports increased from approximately US$94 million in FY2024-25 to nearly US$130 million in FY2025-26, attributing the growth to private sector investment without government subsidies or incentives.

The delegation urged the government to reconsider the tax provisions, warning that the measure could reduce export competitiveness.

KCCI Assures Support

KCCI President Rehan Hanif said the chamber would support the business community by reviewing the legal and taxation aspects of the policy and presenting the exporters’ concerns to the relevant authorities.

He said the chamber plans to raise the issue with the Federal Board of Revenue (FBR) and recommend a review of the withholding sales tax provisions in consultation with industry stakeholders.

Hanif added that tax policies should facilitate exports while minimizing compliance burdens on export-oriented industries.

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