MTO Karachi, ABAD discuss tax issues in construction sector
Karachi – In a significant move to address long-standing tax concerns within Pakistan’s construction sector, the Medium Taxpayers Office (MTO) Karachi and the Association of Builders and Developers of Pakistan (ABAD) held a comprehensive dialogue on Tuesday.
The meeting took place at ABAD House in Karachi, where top tax officials and industry representatives discussed strategies to streamline tax processes and promote sustainable investment.
Aftab Alam, Chief Commissioner Inland Revenue (CCIR) of MTO Karachi, highlighted the critical need to boost the country’s tax-to-GDP ratio, which currently stands at a modest 9% compared to India’s 17%. “If we aim to reduce our debt burden and create a stronger economy, we must improve our tax collection mechanisms,” said Alam. He further emphasized that expanding the tax base was necessary, as the existing pool of taxpayers shoulders a disproportionately heavy load.
Drawing a parallel with national duty, Alam remarked, “In times of conflict, Pakistan’s Army fulfills its responsibilities. Now, it is our duty as citizens to contribute by paying our taxes.” His comments underlined the patriotic and economic importance of tax compliance.
Muhammad Hassan Bakshi, Chairman of ABAD, echoed the urgency of reform. “Pakistan is facing an economic crisis, and investment is our way forward. The construction sector, in particular, can serve as a powerful engine for growth,” he said. He noted that approximately 50% of the $34 billion in annual remittances from overseas Pakistanis is invested in construction, making it a vital part of the economy.
Bakshi stressed that ABAD supports tax reforms but urged the MTO Karachi and the Federal Board of Revenue (FBR) to implement a long-term, consistent tax policy. He said that erratic changes in tax laws create uncertainty and deter investors. “Investment requires stability and transparency. Without these, economic progress remains out of reach.”
He also noted that the construction sector is the largest employment-generating sector in Pakistan, linked with 72 allied industries. “This is a domestic industry—both buyers and sellers are Pakistanis. If we want to boost employment, we must support construction. More business will automatically lead to greater tax revenues.”
Bakshi raised concerns about recent tax notices issued to builders and developers. He suggested that ABAD should receive copies of all notices sent to its members to provide timely legal assistance. He also called on the FBR to appoint a focal person at ABAD House in Karachi to ensure direct and effective coordination.
He further highlighted that in Karachi, particularly in the South District, over 50 investment-ready construction projects worth an estimated $5 billion were in the pipeline. “This is our country. If we want improvement, we must lead the effort ourselves.”
Bakshi concluded by mentioning a new government-backed subsidised housing finance scheme, where citizens would pay 20% upfront and the remaining 80% through installments. “This scheme alone has the potential to generate trillions of rupees in tax revenue,” he noted, reinforcing the construction sector’s central role in economic revival.