At the Post-Budget Consultative Forum on Tax Anomalies hosted by the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), the Pakistan Advertisers Association (PAA) voiced strong opposition to the recent hike in Withholding Tax (WHT) on specified services, including advertising. The forum, held to address industry-specific tax concerns following the announcement of the federal budget, brought together key stakeholders from various sectors, with the advertising and media industry pushing back against what they termed an unjustified and economically damaging increase.
The PAA delegation highlighted that the increase in WHT from 4% to 6% on advertising services has placed an unsustainable financial strain on businesses already grappling with inflation, rising operational costs, and shrinking client budgets. According to industry data shared by the delegation, the hike is effectively equivalent to imposing a 17% super tax on service providers whose average net profit margins stand at approximately 15%.
“In an environment already strained by rising HR costs, inflated utility bills, and reduced client spending, this additional tax burden threatens the viability of service-based businesses,” said Ahmed Kapadia, Chairman of the Pakistan Advertisers Association. He emphasized that the current tax structure fails to account for the operational realities of service industries and risks pushing compliant firms into financial distress.
PAA’s appeal to the FPCCI was formalized in a written submission, urging the body to advocate with the Federal Board of Revenue (FBR) and the Ministry of Finance for an immediate rollback of the WHT increase. The association recommended that the rate be rationalized to 3%, a level they argue better reflects the actual tax burden of compliant, formally operating service-sector firms.
The intervention is part of PAA’s broader strategy to protect the sustainability of Pakistan’s advertising and media ecosystem, which plays a vital role in shaping public messaging, driving brand engagement, and supporting economic activity through marketing and communications.
Ahmed Kapadia further stressed that any increase in tax burdens without sector-specific feasibility analysis creates distortions in the business environment, especially for service industries that are not asset-heavy and rely heavily on human capital. He warned that continued pressure in the form of indirect taxation may force companies to cut costs, reduce employment, or resort to informality—undermining long-term economic stability and growth.
The FPCCI has taken note of the concerns raised and is expected to include PAA’s recommendations in its formal communication to the FBR and other relevant ministries.
This development underscores the urgent need for fiscal policy to consider sector-specific dynamics, particularly in a challenging economic climate where industries like advertising serve as both economic contributors and communicative pillars of the national narrative.