KARACHI: The Karachi Chamber of Commerce & Industry (KCCI) has pledged its unwavering support to the country’s mines and minerals exporters after a delegation of the Mines & Minerals Association, led by Syed Muhammad Akram, called on President KCCI Rehan Hanif to highlight the serious challenges confronting the sector following the imposition of a 5 percent withholding sales tax on locally procured minerals under the Finance Act 2026.
The meeting was also attended by Senior Vice President KCCI Muhammad Raza, Vice President Muhammad Arif Lakhani, Chairman of KCCI’s Federal Taxation Subcommittee Abu Bakar Shamsi, Former EC Member Asif Bega and others.
Speaking on behalf of the delegation, Syed Muhammad Akram, while discussing exporters’ concerns, explained that the minerals sector is almost entirely export-oriented, with virtually 100 percent of its production destined for international markets, while there is negligible local industrial consumption.
Despite this, exporters have now been designated as withholding agents required to deduct 5 percent sales tax from payments made to suppliers, mine owners and brokers.
Akram pointed out that the sector operates through a vast network of hundreds of small-scale, undocumented suppliers located in remote mining areas, many of whom sell only limited quantities ranging from 10 to 50 tons.
Imposing withholding tax obligations on exporters has created widespread resistance among suppliers, resulting in an almost complete disruption of the supply chain since July 1, 2026.
He cautioned that exporters are no longer receiving raw materials required to fulfill export orders, letters of credit (LCs) and contractual commitments with international buyers, placing Pakistan’s credibility in global markets at serious risk.
Highlighting the economic implications, Akram stated that profit margins in the minerals export business generally range between 2 to 3 percent, making it commercially impossible to absorb a 5 percent withholding sales tax.
He warned that the measure would effectively render exports financially unviable and could force many exporters to suspend operations altogether.
Sharing export performance statistics, Akram informed that chromite exports increased from approximately US$94 million during FY2024-25 to nearly US$130 million in FY2025-26, reflecting an impressive growth of around 35 percent achieved solely through private sector efforts without any government subsidies, incentives, rebates or infrastructure support.
He emphasized that the sector has consistently generated valuable foreign exchange for Pakistan through self-financed investment and entrepreneurial efforts, and urged the government to immediately withdraw the withholding tax provisions to prevent irreparable damage to an industry that contributes significantly to national exports.
Welcoming the delegation, President KCCI Rehan Hanif reiterated that the Karachi Chamber remains fully committed to supporting every legitimate issue faced by the business community, irrespective of whether the affected stakeholders are members of KCCI or not.
Rehan Hanif noted that immediately after learning about the challenges confronting the mines and minerals sector, KCCI invited the delegation to obtain first-hand information so that the matter could be pursued effectively with the concerned policymakers.
Highlighting KCCI’s proactive advocacy role, he recalled that the Chamber had played a pivotal role during the formulation of the Federal Budget 2026-27 by presenting comprehensive and evidence-based budget proposals to the government. Unlike conventional recommendations, KCCI not only proposed policy changes but also substantiated them with detailed economic justifications and their likely positive impact on industry, exports and national revenue, resulting in the acceptance of a significant number of KCCI’s recommendations.
Rehan Hanif assured the delegation that the Chamber would extend its full institutional support and complete cooperation in resolving the issue. He emphasized that KCCI would thoroughly examine all legal, taxation and procedural aspects of the newly introduced withholding tax regime and prepare a comprehensive case highlighting its adverse implications for Pakistan’s export-oriented minerals industry.
He further assured that the matter would be vigorously taken up with FBR with a strong recommendation that the withholding sales tax provisions applicable to minerals exported in their entirety be reviewed and rationalized in consultation with stakeholders.
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Rehan Hanif stressed that policy measures should facilitate exports rather than create additional compliance burdens that discourage legitimate businesses and reduce Pakistan’s export competitiveness.
