The federal government has announced the imposition of an 18% sales tax on goods and services in the former Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA), effectively ending the regions’ long-standing tax exemption.
According to Business Recorder, the Federal Board of Revenue (FBR) has issued directives to its field offices to begin enforcing the sales tax from July 1, 2024.
This move, aimed at harmonizing the national tax structure, comes after the expiration of a five-year tax holiday granted following the merger of these areas with Khyber Pakhtunkhwa under the 25th Constitutional Amendment.
The decision aligns the region’s tax regime with the rest of Pakistan and is expected to affect both businesses and consumers.
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However, local trade bodies and business associations have expressed serious reservations, warning that the new tax could further strain the region’s already vulnerable economic conditions.
