APTMA welcomes policy rate cut, raises concerns over draconian tax ordinance

ISLAMABAD: The All Pakistan Textile Mills Association (APTM., welcomes the Monetary Policy Committee’s decision to reduce the policy rate by 100 basis points. This is a commendable step that will aid in reviving economic activity and providing some relief to the beleaguered industrial sector.

However, APTMA believes that a more substantial reduction in the policy rate was both justified and necessary. Inflation in April 2025 reached a historic low of 0.3% and is expected to remain subdued in the foreseeable future, given the significant decline in both international and domestic energy prices. Macroeconomic indicators warranted a steeper cut in the interest rate. The industry and export-oriented sectors continues to grapple with acute liquidity constraints. A deeper reduction in the cost of capital would have gone a long way in providing critical support to the industry and ensuring its continued contribution to exports and employment.

At the same time, APTMA lodges its strong protest against Ordinance No. IV of 2025, issued on May 2, which introduces far-reaching and concerning amendments to the Income Tax Ordinance, 2001.

The amendments inserted into Sections 138 and 140 of the Income Tax Ordinance effectively strip taxpayers of their legal rights and protections under the law. The changes empower the Federal Board of Revenue (FBR) beyond reason and above the High Courts and the Supreme Court of Pakistan. The revised provisions override legal timelines and judgments, granting FBR unfettered authority to enforce its demands regardless of judicial relief.

This is a draconian measure that dangerously expands the discretionary powers of the FBR, an institution already frequently criticized for high-handedness and harassment of compliant taxpayers. By nullifying court decisions and prescribed timelines, this ordinance undermines the sanctity of the judicial process and the principle of due process enshrined in the Constitution. It will only exacerbate the climate of fear and uncertainty for legitimate businesses, creating an environment detrimental to investment and growth.

APTMA urges the government to immediately withdraw these amendments and engage with stakeholders to ensure that any tax reforms are fair, transparent, and respectful of the rule of law.